Federal Tax Credit for Insulation: Tax Year 2018

*Notice: There is a lot of confusion on this topic. As of the date of publication, it appeared the tax credit would be available to homeowners for 2018, whereas Congress only passed part of the bill. This is subject to change at any time, as this Bill is currently before Congress and could include home insulation. Please check with your tax preparer.

Foam insulation already saves you money on your monthly energy bills and in some cases with rebates, but now you might even be eligible for a federal tax credit for insulation.

Taxpayers who made qualified energy efficiency improvements to their home, including foam insulation, could be eligible for the Non-Business Energy Property Tax Credit using the Internal Revenue Service form 5695 with your 2018 federal tax return.

If an insulation contractor insulated your principal residence with foam insulation between January 1, 2018, and December 31, 2018, you may be eligible for a 10 percent tax credit on the material of your project up to a lifetime value of $500.

Non-Business Energy Property Tax Credit

As of the 2018 tax year, the federal government is offering the Non-Business Energy Property Tax Credit that is good through 2019 and then is reduced each year through the end of 2021, according to Turbotax.

The qualified energy efficiency improvements include home insulation, exterior doors, exterior windows and skylights, and certain roofing materials.

This tax credit can be claimed for 10 percent of the cost of qualified energy efficiency improvements. The credit is worth a maximum of $500 for all years combined, from 2006 to the present. Of that combined $500 limit, a $200 maximum can be for windows.

New construction, rentals, secondary homes, outbuildings, and businesses do not qualify for this tax credit. Insulation labor costs also don’t qualify.

It’s best to consult with your tax professional to see if your insulation project qualifies for the Non-Business Energy Property Tax Credit.

If You Qualify for the Insulation Tax Credit

For example, at RetroFoam of Michigan, we don’t break down the material and labor costs, but 85 percent of your total invoice is contributed to material costs.

Here’s how to break that down – if your total insulation project totaled $5,000, 85 percent of this total is the material cost you can use for this credit, or $4250. Take 10 percent of that and you could receive a $425 tax credit if you haven’t used any of the $500 maximum.

If you need to request your invoice, contact your insulation contractor. If RetroFoam of Michigan insulated your home, just give our office a call at 866-900-3626.

More Information

Here are some resources you may find helpful. If you have further questions, consult with your tax preparer.

Energy Tax Credit: Which Home Improvements Qualify?

Federal Tax Credits: Insulation

IRS Form 5695

Form 5695 Instructions