Beneficial Tax Credits for New Homes and Upgrades
Proper insulation is essential in creating an efficient and comfortable home. The good news is that through the Inflation Reduction Act, there are tax credits for both new homes and upgrades to existing homes, and those tax credits can benefit everyone including contractors.
New home builders can take advantage of the 45L tax credits, while the 25C tax credits are for homeowners to claim – but because homeowners need someone to do the work of installing additional insulation, 25C is a win for contractors too by creating new jobs. Whether it’s 45L or 25C, Johns Manville has the details for you.
25C: HOMEOWNER Tax Credits and
Contractor Benefits
Time is running out for 25C tax credits! And while they directly benefit homeowners, there are also benefits for contractors too. With the 25C Energy Efficient Home Improvement Credit, homeowners can get tax credits for adding insulation to improve their home’s energy efficiency. But to do so, they’re going to need a contractor to install the new insulation. Which is exactly how the tax credits benefit you, the contractor, too – more jobs!
With 25C tax credits set to expire December 31, 2025, now is the time to improve home energy efficiency by adding insulation to meet new energy codes. It’s a win-win for the homeowner, who will see reduced energy bills and also be eligible for the tax credits.
Under 25C, homeowners get credits for up to 30% of the cost of insulation materials installed, for a maximum of $1,200 each year. There’s no lifetime dollar limit, meaning even if homeowners have made energy efficiency upgrades in previous years, they still qualify for additional savings. But work must be completed by the end of the year to be claimed on next year’s tax returns, so there’s no time to waste.
The R-value of insulation required to meet the 25C credit requirements varies depending on the climate zone in which a home is located. Check out the Johns Manville insulation calculator, a handy, easy-to-use tool that can determine how much product is needed and even direct you where to buy.
For more information on how to claim the tax credit,
visit irs.gov for updates to Form 5695.
25C Tax Credit FAQs
Also known as the Energy Efficient Home Improvement Credit, 25C is a federal tax credit designed to encourage homeowners to make energy-efficient upgrades, including insulation and air sealing, to their homes.
A tax credit is a direct reduction in the amount of income tax you owe. You claim tax credits when you file your annual tax return. The credits are reported on your tax forms, and you’ll indicate which tax credits you are claiming and provide the necessary information according to the IRS.
A tax credit is directly subtracted from your tax liability, dollar for dollar. For example, a $1,000 tax credit will reduce your tax bill by $1,000. A tax deduction lowers your taxable income
Homeowners who make energy efficiency updates to their primary residence are eligible. It must be an existing home that you improve or add on to.
The maximum credit is 30% of the cost of eligible expenses, up to $1,200 per year. Installed insulation and air sealing materials are eligible expenses, but labor costs are not eligible.
The Johns Manville Insulation Calculator makes this easy! Answer a few questions and it’ll tell you the recommended R-value, how much you’ll need and even suggested locations to buy.
A wide variety of JM insulation products are eligible including batts, rolls, loose-fill, spray foam, and rigid board foam insulation.
Qualifying projects must be complete by the end of the calendar year, December 31, 2025.
Yes, Do It Yourself projects can qualify for the 25C tax credit, but be sure to check the details to ensure your project meets the requirements. These cover things like eligible expenses, qualified products that meet specific energy efficiency standards and documentation.
Watch On-Demand!
Insulation Intel® Webinar:
IRA 25C Tax Credits: What’s in it for the contractor?
New tax credits are a big incentive for homeowners to install additional insulation. So what’s in it for you, as an installer or contractor? More jobs (and more income)! Johns Manville has all the details in this webinar.
45L: HOMEBUILDER Tax Credits
The Inflation Reduction Act includes much-needed improvements and extensions to federal tax credits for home energy efficiency. There are credits for new home construction. It’s simple for a builder to take advantage of these energy tax credits, and with the help of Johns Manville insulation products, you can make the most of this opportunity.
Surprisingly, the differences in insulation material costs for the $2,500 tax credit vs. the $5,000 credit for new builds are minimal, even none in some climate zones.
Three Bedroom 2,200 SF Home, 2x6 framed
Check out the following charts for insulation material costs across climate zones and for different sections of a typical 3-bedroom home.
HIGHLIGHTED CELLS state the difference from ENERGY STAR v3.1 to Certified DOE Zero Energy Ready.
Three Bedroom 2,200 SF 2X6 Advanced Frame Home
