Insulation Tax Credit

Federal Tax Credit Reinstated for 2015 and Throughout 2016 for Installed Insulation

The insulation tax credit (IRS Section 25C) is for homeowners who have upgraded their insulation in 2015 and throughout 2016. The credit is 10% of the cost of the insulation materials up to $500 (cost of labor not included in tax credit).

How does a taxpaying homeowner qualify for the tax credit?
Qualified energy efficiency improvements are eligible for the tax credit. A qualified energy efficiency improvement is an energy efficiency building envelope component such as insulation materials or systems which are specifically and primarily designed to reduce the heat loss or gain for a dwelling:

(1) that follows the prescriptive criteria of the 2009 International Energy Conservation Code;

(2) that is installed in or on a dwelling located in the United States and is owned and used by the taxpayer as the taxpayer's principal residence;

(3) the original use of which commences with the taxpayer; and

(4) that reasonably can be expected to remain in use for at least five years.

Amount and Duration of Tax Credit Provision
The tax credit applies to energy efficiency improvements placed in service between January 1, 2015, and December 31, 2016.

Your customers can use the latest version of IRS Form 5695 to apply for the tax credit. The lifetime cap on the tax credit is $500. Therefore, a homeowner who previously took at least a $500 tax credit would not be eligible for further credits.

Manufacturers Certification Statements for Homeowner Recordkeeping 
Taxpayers claiming the credit should retain the certification statement of the manufacturer of the insulation that they are having installed.