Here’s what to know about the new increased financial incentives for insulation upgrades.
Upgrading your home’s insulation is one of the best ways to make it way more efficient and comfortable.
(How do we know? Here’s some proof. We’re Sealed, and we’re home energy experts on a mission to make homes healthier, more efficient, and more comfortable year round.)
And now, thanks to hefty financial incentives from the 2022 Inflation Reduction Act, there’s never been a better time to install or upgrade the insulation in your home—especially around the attic, where it’ll do the most good.
But how do you take advantage of all these insulation tax credits—as well as federal, state, and utility insulation rebates? Well, you’re in luck!
In this guide, you’ll learn everything you need to know to take advantage of money-saving incentives. (Consider this your all-in-one guide to saving on a top-quality insulation upgrade!)
Key Points:
- The 25c tax credit for insulation and air sealing upgrades is increasing in 2023 to a max of $1200 per year.
- Insulation rebates are also available—in some cases, you can get up to $1600 back on qualifying insulation upgrades! (There are often local utility company insulation rebates, too, in addition to the new federal ones.)
- Qualifying houses can get insulation upgrades for NO upfront cost.
Ready to get started? Here’s what you need to know about getting the most out of U.S. energy upgrade incentive programs.
We’re energy-efficiency experts, so this guide will give you what you need to know to cover the essentials. Bring financial questions to your tax professional!
Table of contents:
- How much is the insulation tax credit?
- What insulation rebates are included in the Inflation Reduction Act?
- Which insulation products are eligible for the new insulation tax credits?
- How do you get the insulation tax credits and rebates?
- How can you get the most out of your insulation tax credits?
- How to get home insulation upgrades at no upfront cost
- Common questions about the insulation tax credit and insulation rebates
How much is the insulation tax credit (2022 and 2023)?
Good news here—thanks to the Energy Efficient Home Improvement Credit, you can now get a tax credit of up to $1200, depending on when your installation was installed.
- If you added insulation to your home in 2022 (or before): You can receive a tax credit of up to 10% the cost of the materials.
- If you install insulation in 2023 (or after): The insulation tax credit covers up to 30% of the costs associated with installing insulation in your home—up to a maximum of $1,200 per year.
Curious why there are incentives for insulation upgrades? Here’s why adding insulation can save so much energy.
Insulation rebates 2023: What incentives are included in the Inflation Reduction Act?
If you install insulation in 2023 or after, you could be eligible for an insulation rebate of up to $1600 under the new High-Efficiency Electric Home Rebate Program Act (HEEHRA)—a brand new program created by the Inflation Reduction Act.
That’s the short answer.
The slightly longer answer is that the actual amount of the rebate is not guaranteed for everyone—it depends on a variety of factors, most notably your household’s annual income.
And to be eligible for a rebate at all, your household must make an income that’s less than 150% of the local median income (which is determined by your state).
Keep in mind, too, that if you’re taking advantage of other home improvement rebates (there are a lot!), that your total combined rebate can’t be more than $14,000 per household.
There’s another caveat to these new rebates, too: Your State Energy Office (SEO) will need to administrate the new program, which could take some time.
It’s estimated that this new program will (hopefully!) start rolling out in the later half of 2023. So if you’re planning insulation upgrades for 2023, check with your local utility or SEO for any current rebates they are offering to customers in the meantime.
Learn more about how to get rebates and tax credits when you install a new heat pump. Or see what utility rebates may be near you.
Which insulation products are eligible for the new insulation tax credits?
So, what type of insulation qualifies for the energy tax credits?
It’s not too complicated. In fact, most products you think of as insulation are eligible for the tax credit.
Typical bulk insulation products can qualify, such as:
- Insulation batts (like the fluffy pink stuff)
- Insulation rolls (again, usually fluffy and pink)
- Blow-in fibers, like loose cellulose
- Rigid boards, including foam board or mineral wool board inserts
- Expanding spray foam and pour-in-place insulation
You could cut up to 50% of your energy use when getting high-performance insulation, professional air sealing, and heat pump HVAC upgrades with Sealed. Learn how.
Additionally, products that seal air leaks can also qualify for a tax credit—as long as they come with a Manufacturer’s Certification Statement. (1)
These air sealing products can include:
- Weather stripping
- Spray foam in a can
- Caulk designed to air seal
- House wrapping
So what’s a Manufacturer’s Certification Statement—and how do you know if your insulation has one?
A Manufacturer’s Certification Statement is just a declaration that the product you’re buying is eligible for a tax credit. You should be able to find it by examining the product packaging—if your product is eligible for a tax credit, the manufacturer should say so in an obvious place! (2)
Reminder here, too, that you need to keep documentation of any insulation products that have the Manufacturer’s Certification Statement. You’ll need records of them so you can claim your tax credits. (More on this below.)
By the way, if all of this insulation talk is making you feel a bit out of your depth, don’t worry: An expert installation installer will know exactly what your house needs. (If your house qualifies, you can call in a professional installer for no upfront cost.)
Insulation is not an upgrade you want to get wrong.
It’s a core component of your house’s structure and energy efficiency (and it’s important to get right for your own health, too). For more project considerations, read To DIY or not to DIY insulation?
90% of US homes are under insulated.
NAIMA
How do you get the insulation tax credits and rebates?
An important note here: While credits and rebates both ultimately achieve the same overall goal—more money in your pocket—they’re administered through different programs.
And that means you need to know how to take advantage of each program separately.
How do you get insulation tax credits?
The quick answer here is that, if your household is eligible, your accountant can apply these tax credits for you during tax season.
So are you eligible? Can you write off new insulation on your taxes?
Probably—but we can’t tell you this for sure. This is one of those questions that you really should bring to your tax professional (which we definitely are not).
A general guideline, though, is you could be eligible for the tax credit if:
- You are the owner of the house, and
- The house already exists (it’s not a new build), and
- The house is your primary residence
(The credit won’t apply to new construction or rentals, unfortunately.) (3)
Also, to take full advantage of the insulation tax credit, you’ll need to owe at least $1,200 in taxes—because tax credits are reductions in the amount of tax you owe.
The process of actually applying the credits will be done by your accountant.
But—of course!—you’re responsible for reporting your insulation upgrades (as well as providing any receipts and documentation necessary to prove your eligibility).
You’re probably wondering exactly which receipts and paperwork you’ll need, and again, we’re going to refer you to your accountant—that’s their job.
We can only recommend that you contact them early in tax season and make sure they know that you’d like to apply Inflation Reduction Act tax credits to your total tax liability.
In the meantime, it’s a good idea to keep track of all the records and receipts associated with your insulation project, including any Manufacturer’s Certification Statements, in one place.
That way, when tax time rolls around, you’ll be ready to take full advantage of the credits.
Keep track of all the records and receipts associated with your insulation project.
How do you apply for state and utility rebates? (Insulation rebates 2022 and 2023)
How do you get insulation rebates in 2023?
First, it’s important to know that these rebates are administered at the state and local level—which means the process can vary a lot depending on where you live. (And the process of securing a rebate can take months—so it’s important to plan ahead.)
In general, though, once you know the specific rules and requirements for your state, you’ll need to get the right paperwork filled out.
This usually includes a completed rebate form plus documentation of your installation, like receipts and invoices, but you should contact your local utility company or energy office before you start the installation process. That way, you’ll know exactly what kind of documentation and paperwork you need to complete in order to get your rebate.
And important note, too: You may also need to prove that your insulation was installed professionally. That’s because some rebates require you to have an expert installation, which can include a qualified energy auditor inspecting the insulation before and after installation. (Learn more about energy audits here.)
Some rebates require you to have an expert installation.
By the way, if you go with Sealed for your home energy upgrades, we’ll take charge of the research process and make sure that you have everything you need to get everything you’re eligible for.
How can you get the most out of your insulation tax credits?
If you want to get the most bang for your buck, you should almost definitely start with attic insulation. And you should absolutely not forget to air seal.
Air sealing is often forgotten, but it’s an important step in correctly insulating your home.
Why? Well, it’s simple: If your attic is under-insulated (or uninsulated!) your home is losing a huge amount of energy through the roof.
And if you have open gaps, seams, and cracks throughout your attic and foundation (most homes do!), those need to be sealed up to stop excess airflow into your home.
Investing in attic insulation and air sealing is one of the most beneficial upgrades you can make to your home, and it’s crucial to fully weatherizing your home.
Investing in attic insulation and air sealing is one of the most beneficial upgrades you can make to your home.
That’s because a large portion of energy loss within a home is through the roof—via a process called the Stack Effect.
(Want to know more about how energy is escaping through the roof? Here’s the full story on attic insulation—what it is, why you need it, and what you should be looking for.)
Upgrading to the right insulation for your attic space (and sealing up all those open air leaks) will help to keep your home more comfortable and efficient all year long.
Not only do these upgrades ensure that you get the most out of your heating and cooling system, it can drastically cut your energy bill.
You could cut up to 45% of your energy waste in your existing home with the right air sealing and insulation upgrades.
2022 Insulation Industry Opportunity Study
Get a professional to install insulation (and figure out the rebate situation!)—NO upfront cost
We get it—the idea of researching and applying for all these financial incentives for home-energy upgrades might be a bit intimidating.
Do you want someone else to manage all this for you? Rebate research? Finding contractors? Managing the project?
When you partner with Sealed, we make the insulation process effortless for you—and if your house is eligible to get upgrades with Sealed, then you won’t have to worry about the work being done right.
We guarantee your energy-savings results. And you get to pay for the upgrades based on a plan that works best for you and your budget. Learn about the payment program.
(Plus, we’ll make sure you have everything you need to qualify for any energy upgrade incentives—including insulation, heat pumps, or weatherization tax credits and rebates!)
Complete our quick questionnaire here to see if your house qualifies for insulation upgrades at NO upfront cost.
If I don’t have to spend any extra money to get a huge improvement to my home, it’s just a no brainer at that point.
Scott. R, Sealed customer
Frequently asked questions about the insulation tax credit and insulation rebates
Here a few common questions around the new insulation tax credits and insulation rebates.
- Where can I get more information on the new tax credits and rebates under the Inflation Reduction Act?
- Can I write off insulation on my taxes?
- Is there an insulation tax credit for 2022?
- Is there an insulation tax credit for 2023?
Where can I get more information on the new home energy upgrade incentives under the Inflation Reduction Act?
If you’d like more information on the new home energy upgrade incentives—including heat pump tax credits, heat pump water heater incentives, and more—check out our Homeowner Guide to the Inflation Reduction Act energy upgrades.
You can also visit the White House Clean Energy site or visit this IRS FAQ page.
Can I write off insulation on my taxes?
Quite possibly! Thanks to the Inflation Reduction Act home energy upgrade incentives, the IRS is now issuing increased home energy tax credits of up to $1200 for insulation upgrades.
To qualify, you’ll need to be the primary owner of the house—and the house needs to already exist. (The credit won’t apply to new construction.)
There are a few other nuances to qualification, too. Be sure to get the full story here.
Is there an insulation tax credit for 2022?
Yes! If you installed insulation in 2022, you may be able to write off some of the cost (up to 10%) on your taxes.
Is there an insulation tax credit for 2023?
Definitely. The tax credit for insulation upgrades is actually increasing in 2023—to 30% of your project costs, up to a maximum of $1200.
