The Insulation Tax Credit
The insulation tax credit, also called the Energy Efficient Home Improvement Credit, allows eligible homeowners to receive a federal tax credit of up to $1,200 annually for upgrades like insulation and air sealing.
Project Probono can help ensure that your work qualifies for this insulation tax credit. Reach out today to see how much you could save with the insulation tax credit and other available incentives and rebates.
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To the Office of Senator McCormick, With just days remaining before a decision is made on the future of Section 25C, I respectfully urge your office to hear from the people it impacts most—contractors like myself, and the Pennsylvania families we serve every day. My name is Michael Ohm, and I’m the owner of Project Probono LLC, a home performance contractor based in the Lehigh Valley, serving 11 counties across Northeast Pennsylvania since 1997. We specialize in in-house diagnostics, air sealing, insulation, and comfort upgrades that make homes safer, healthier, and more affordable to live in. Our small team of seven adjusts with community demand, and our business—like many others—relies on the very credit now at risk. We’re just one voice. But we stand with thousands of home performance professionals across the state, helping real people afford real improvements. I write on behalf of them—and for the homeowners who don’t even know what 25C is, but whose lives are directly shaped by it. First-time homeowners tell us they’re delaying starting families because their homes are too inefficient and expensive to raise a child in. With help from 25C, we’re able to provide upgrades that reduce energy burden and bring long-overdue relief. We’ve seen these families move forward—sometimes quite literally—into parenthood, with renewed confidence in their home and finances. We also work with retirees—many of whom spent decades putting off basic repairs, now just hoping to live out their years comfortably. In more than one case, the energy savings made possible by 25C allowed a customer to afford new, life-saving medication. That kind of impact doesn’t appear on a rebate form—but it’s exactly what this credit makes possible. Section 25C is not political—it’s practical. It supports local jobs, protects vulnerable residents, and delivers long-term returns to taxpayers and the environment alike. I would deeply appreciate the chance to speak with your office in the next few days. Not as a lobbyist, but as someone who has spent nearly three decades providing solutions and noticing the small things that add up to a better life for our neighbors. Thank you for your time and consideration. Sincerely, Michael Ohm Owner & Building Analyst Project Probono LLC www.projectprobono.com Lehigh Valley, PA 484-966-0740
What Is a Tax Credit?
Homeowners sometimes ask us if home insulation is tax deductible. Tax credits and tax deductions are similar tax breaks, but they’re not the same. A tax credit reduces the amount of taxes you owe, while a tax deduction reduces your total taxable income. The insulation tax credit only applies to federal taxes, not state taxes.
How Does the 25C Insulation Tax Credit Work?
The 25C tax credit (25C refers to the relevant section of the IRS tax code) allows you to take a federal tax credit equaling 30% of the total cost for a variety of energy efficiency home upgrades, including qualifying insulation and air sealing expenses. There is an annual maximum credit of $1,200 for the category of upgrades that includes insulation.
Attic insulation, wall insulation, basement insulation, and crawl space insulation all qualify for the credit, as do many different types of insulation materials, as long as certain insulation levels are met. Project Probono will work with you to ensure that your insulation work is eligible.
Benefits of the 25C Tax Credit for Insulation and Air Sealing
Taking advantage of the insulation tax credit means that you’ll see all of the benefits of improving the energy efficiency of your home: lower energy bills, improved home comfort, and a house that’s better for the environment. But there are additional benefits unique to this specific tax credit:
Available to Anyone With Federal Tax Liability
If you pay federal taxes, you can claim your insulation tax credit! This is a national incentive available to any homeowner, unlike many rebate programs.
Can Be Combined With Other Incentives and Insulation Rebates
But if you do qualify for other incentives, the 25C tax credit is a great opportunity for additional savings, making upgrading your home even more affordable.
$150 Credit for Energy Audits
If your eligible tax credit for insulation and air sealing work doesn’t reach the $1,200 annual maximum, you can also take a 30% credit—with a limit of $150—for any energy audit related costs.
Calculated Separately From Heat Pump Upgrades
The 25C homeowner tax credit covers a number of different energy-efficiency upgrades for your home, and insulation and air sealing upgrades are in a separate category from heat pump HVAC systems and heat pump water heaters. This means that you can take both a $1,200 insulation tax credit and a $2,000 heat pump tax credit in the same year, for as much as $3,200 in total tax credit savings!
How to Claim Your Tax Credit
Claiming your tax credit for insulation and air sealing upgrades is straightforward:
- Verify Eligibility: Project Probono will verify with you that the insulation work we’ve done for you meets the criteria for tax credit eligibility.
- Keep Your Receipts: We will also provide you with an invoice breaking down the tax-credit-eligible portion of your work. You’ll need this when you or your accountant goes to file your taxes for the year in which work was done on your home.
- File IRS Form 5695 or consult a Tax Professional:* When you file your taxes, remember your tax credit!
*At Project Probono, we have a tax professional prepare our taxes, and recommend that you do, too. Our goal is to be as helpful as possible in ensuring you get your tax credit, but we’re experts in insulation, not taxes!
