Save on Insulation Installation for Your Baltimore Home
In an effort to help Baltimore homeowners and builders save money on new, energy-efficient home upgrades, ENERGY STAR® is offering tax credits. If you replace your old, outdated insulation with one that meets ENERGY STAR’s criteria, you’re eligible for a credit.
This rewards you for making energy-efficient changes and your utility costs will start to go down.
ENERGY STAR Insulation Tax Credits: What You Need To Know
The insulation tax credit is valid for products that are purchased and installed from Jan. 1, 2023, through Dec. 31, 2032.
- Homeowners can claim up to 30% of the project cost.
- The maximum credit amount for insulation is capped at $1,200.
- The overall yearly limit for this energy efficiency tax credit is $3,200.
- The breakdown includes a $1,200 limit for home improvements like windows, doors, skylights, insulation, and specific electrical installations.
Tax Credit-Eligible Products
These insulation products qualify:
- Blow-in fibers
- Rigid boards
- Expanding spray foam
Products designed to air seal can also be eligible if they come with a manufacturer’s certification statement. These include weatherstripping, spray foam in a can for air sealing, caulk for air sealing, and house wrap.
Who Is Eligible for the Credit?
Your home must be your primary residence and must be an existing property, not new construction. Newly built houses and rentals are excluded. Eligible homes include houses, houseboats, mobile homes, cooperative apartments, condos, and manufactured homes, provided they’re located in the U.S.
Federal Income Tax Credits & Incentives
The Inflation Reduction Act of 2023 has outlined several ways homeowners and contractors can make improvements that will benefit the planet and help your wallet. As temperatures rise and the weather becomes more unpredictable, upgrading your home’s insulation is a great way to stay on top of our ever-changing climate.
What’s Included in the IRA?
If you replace your current insulation with upgraded insulation between January 2023 and January 2032, you’re eligible for a $1,200 credit. The total limit for a tax credit in one year is $3,200.
Energy-Efficient Home Improvement Credit
This credit equals 30% of certain qualified expenses and can be redeemed if you’ve done any of these since the beginning of 2023:
- Qualified energy efficiency improvements installed during the year
- Residential energy property expenses
- Home energy audits
Residential Retrofit Incentives
You can receive a credit of 30% of the cost of insulation and air sealing materials up to $1,200 per year.
New Home Incentives
New incentives have been introduced to support energy-efficient home construction, aiming to reduce environmental impact and promote sustainable living. For single-family homes that align with ENERGY STAR Version 3.2 and adhere to the 2021 IECC prescriptive envelope standards, builders can now receive a generous credit of $2,500.
Taking a step further toward energy efficiency, homes meeting the stringent DOE Zero Energy Ready Home standard are eligible for an impressive builder credit of $5,000.
Multifamily units also reap the benefits of these incentives. Builders can receive a credit of $500 or $1,000, which can escalate to a substantial $2,500 or $5,000 credit when prevailing wage requirements are met.
The revival of the previous law’s credit, in effect until 2022, has been reinstated. Notably, from Jan. 1, 2023, to Dec. 31, 2032, an enhanced credit amount will be applicable, inspiring builders to embrace sustainable construction practices and contribute to a greener future.
How To Claim Tax Credits
To claim these credits, you’ll need to fill out Form 5695, Residential Energy Credits Part II, and submit it with your tax return. You must claim the credit for the tax year it was installed, not just purchased.
Contact Maryland’s Trusted Insulation Contractor for Home Insulation
Winner Insulation is the DMV area’s number one choice for energy-efficient insulation services. Whether you’re a contractor working with military and commercial builders or a homeowner looking to improve your comfort, we’re the ones to call.
We’re USAF veteran-owned and stand behind every product we install. We specialize in spray foam insulation, which is a great option if you’re looking to install insulation that will meet the IRA tax credit’s criteria.
Common Frequently Asked Questions About Tax Credit Incentives
Common questions we receive about insulation tax credit incentives include:
Do you need to owe taxes to take advantage of the 25C energy-efficient home improvement tax credit?
The IRA tax credit you receive goes toward what you owe the IRS; you only benefit from the tax credit if you owe money on your taxes. If you don’t owe the IRS, you can skip this tax credit.
Are tax credits available for improvements made to a second home or an investment property?
No, tax credits are eligible on primary residences only, not properties used as rentals or vacation homes, and it only applies to homes in the U.S.
Can a taxpayer claim credits for expenditures incurred for a newly constructed home?
No, the credit is only for pre-existing primary residences, which include houses, houseboats, mobile homes, cooperative apartments, condominiums, and manufactured homes.
What is considered an eligible expense under the 25C credit?
Insulation products, including batts, rolls, blown-in fibers, rigid boards, expanding spray foam, pour-in-place, and air-sealing products such as weatherstripping, spray foam in a can, air-sealing caulk, and house wrap, are eligible.
Can I claim the tax credit for multiple improvements in the same tax year?
Yes, you can claim up to $1,200 for insulation-related improvements. There are other tax credits you can stack with it to increase your credit amount, but you can’t exceed $3,200 per year.