If you’ve been thinking about adding insulation to your home, we have good news for you: you can get a 30% tax credit on insulation upgrades, up to $1,200 per year. That’s money back in your pocket just for making your home more comfortable and energy efficient!
But how does the insulation actually work? Let’s break it down.
What Is the Insulation Tax Credit?
This federal tax credit for insulation is the result of changes made to the 25C Nonbusiness Energy Property Tax Credit, an existing tax credit that, honestly, hadn’t been worth enough for most homeowners to pay attention to.
But, the Inflation Reduction Act (IRA) gave this tax credit a much-needed revamp, increasing the value of the credit and updating it. The newly renamed Energy Efficient Home Improvement Credit is now worth 30% of the cost of a variety of home upgrades, including insulation and air sealing, up to $1,200 per year.
This credit is available for insulation installed between 2023 and 2032, so you’ve got time to claim it—but why wait? Every year you delay is another year of higher energy bills. Plus, you can claim the tax credit multiple times. So if you want to make multiple upgrades, you can spread them out and keep getting tax breaks every year until the incentive expires in 2032.
What Kind of Insulation Qualifies?
You can claim the insulation tax credit for almost any insulation upgrade you make to your home, including:
How Do You Claim the Insulation Tax Credit?
Tax credits aren’t like rebates where you receive a check in the mail. Instead, tax credits decrease the amount of taxes you owe. Because the insulation tax credit is a federal tax credit, it reduces what you owe when you file your federal taxes, not your state taxes.
Claiming the insulation tax credit is pretty easy. All you’ll need is a receipt from Total Home Performance that shows the total cost you paid for the insulation and air sealing materials used to upgrade your home.
- Install qualifying insulation - Make sure to keep receipts and invoices (you’ll need them at tax time).
- Fill out IRS Form 5695 - This form lets you calculate and claim the credit when you file your taxes.
- Submit it with your taxes - The credit reduces your tax bill when you file, saving you money.
Can You Combine the Insulation Tax Credit with Other Rebates?
Yep! There are local rebates that can stack on top of the federal tax credit. Some utility companies, including Delmarva Power and BGE offer significant rebates on insulation, so you can save upfront and get a tax break later. Total Home Performance is a qualified contractor with these programs, and we can help you take advantage of savings.
We recommend checking with your utility company to see what’s available. Or just ask us! We keep up with all the latest incentives and can let you know what you’re eligible for based on where you live and what utility company you use.
Why Upgrade Insulation Now?
If your home is drafty, your energy bills are high, or your HVAC system seems to run non-stop, chances are you could use better insulation. Here’s why now’s a great time to make the upgrade:
- Lower energy bills – Insulation pays for itself in savings over time.
- More comfort – No more cold drafts in winter or a sweltering second floor in summer.
- Healthier indoor air – Keeps out moisture, dust, and allergens.
- Tax credits & rebates – Extra savings for doing something that makes sense anyway.
Ready to upgrade your home’s insulation and claim your tax credit? Give Total Home Performance a call. We’ll help you figure out the best insulation for your home and provide everything you need to claim your maximum credit.
*At Total Home Performance, we’re insulation experts, not tax experts. We recommend consulting a tax professional about your specific situation before filing.