Residential Insulation of Retrofit Tax Credits and New Home Builder Tax Credits

ICAA is pleased to provide its members with a condensed look at federal government tax incentives reinstated for 2025 and new incentives beginning January 1.

How the 25C Tax Credit Works:

30% Credit on Costs – Homeowners can receive a federal tax credit equal to 30% of the total cost of qualifying insulation and air sealing upgrades, with an annual limit of $1,200.

Covers All Major Insulation Types – Whether you’re adding insulation to your attic, walls, basement, or crawl space, you can qualify as long as the materials meet efficiency standards.

Can Be Combined with Other Rebates – Many local utilities and energy efficiency programs offer additional rebates and incentives, which can be stacked with the federal tax credit for even greater savings.

Separate from Heat Pump Tax Credits – The 25C Tax Credit for insulation is in a different category than the heat pump tax credit ($2,000 max credit annually), meaning homeowners can claim both in the same year for up to $3,200 in total tax credit savings.