Now more than ever, insulation and air sealing pay off! New federal income tax credits are available through 2032—providing up to $1,200 each year to lower the cost of energy-efficient home upgrades. 

A Home Improvement That Pays Off 

Making a few key updates to your home can help to save energy—and thus cut your lowing and cooling costs. Averaged across the U.S., weatherization measures such as air sealing and increasing the quality and thickness of attic insulation can reliably reduce energy usage by 12–18%. Deeper building retrofits—like adding insulation to walls, basements, and rim joists and installing higher-efficiency windows—could deliver around 33% energy savings.* 

With the latest tax credits and incentives, now is the time to improve the energy efficiency of your home. The Residential Efficiency Tax Credit offers homeowners the opportunity to receive a tax credit of 30% for insulation and air sealing materials installed in their primary residence—up to $1,200 in costs. The credit is available on a yearly basis until December 31, 2032. After installation, use IRS Form 5695 to apply for the credit.

• You may claim the energy efficient home improvement credit for improvements to your main home (where you live most of the time).
• This credit does not apply to a newly built home.
• The credits have no lifetime dollar limits. Homeowners may claim the maximum annual credit every year that eligible improvements are made, through 2032. 
• The credits are nonrefundable, so you cannot get back more on the credit than you owe in taxes.
• You may not apply any excess credit to future tax years.

To learn if you are eligible for these benefits or others in our area, please visit: https://www.energy.gov/save/rebates.

Tax Credits for Builders 

The federal government has enhanced the financial incentives available for builders who construct energy-efficient homes and structures. The tax credit is specifically tied to ENERGY STAR^® certification for single-family, manufactured and multifamily homes and either ENERGY STAR or the Zero Energy Ready Home requirements for single-family homes.

Take Advantage of the Federal Tax Credits

• Builders can receive a credit of $2,500 for single family homes that meet ENERGY STAR^® Version 3.1.
• A credit of $5,000 is available for homes that meet the Department of Energy (DOE) Zero Energy Ready Home Program. 
• A builder credit of $500/$1,000 is available for constructing certified multifamily units. Incentives increase to $2,500/$5,000 when meeting prevailing wage requirements. 
• Producers of manufactured homes are eligible for a $2,500 tax credit for meeting the applicable ENERGY STAR Manufactured New Homes program requirements 

The tax credit amount applies until December 31, 2032. See your tax professional for details on how to qualify and claim this credit.

Learn more about federal energy tax credits for homebuilders here. 

Tax Deductions for Energy-Efficient Commercial Buildings

Section 179D of the Internal Revenue Code allows deductions for energy-efficient commercial buildings. Taxpayers claiming this tax deduction can receive as much as $5.00 per square foot when making energy efficiency improvements above certain thresholds to commercial and multifamily buildings. The deduction can be allocated to engineers, architects and contractors responsible for creating the technical specifications of a building. Check out ENERGY STAR to learn more about this tax deduction.

If you have questions about insulation tax credits, please contact Cullen Insulation today.

*Source: American Council for an Energy-Efficient Economy, July 2023