Tax Credits and Rebates for Homeowners
Now more than ever, insulation and air sealing pay off! New federal income tax credits are available through 2032—providing up to $1,200 each year to lower the cost of energy-efficient home upgrades. Check out these unique ways to cover some of your project costs through the tax credits and rebates available to you.
Residential Efficiency Tax Credit
The Residential Efficiency Tax Credit offers homeowners the opportunity to receive a tax credit of 30% for insulation and air sealing materials installed in their primary residence—up to $1,200 in costs. The credit is available on a yearly basis until December 31, 2032. After installation, use IRS Form 5695 to apply for the credit.
Rebates through the HOMES Act
Rebates are available for homeowners who make performance-based whole home efficiency upgrades. The rebate savings include:
- For homes achieving 20-35% modeled energy savings – rebate of the lesser of $2,000 or 50% project cost.
- For homes achieving at least 35% modeled energy savings – rebate of the lesser of $4,000 or 50% project cost.
- For homes achieving at least 15% measured energy savings – rebate payment rate per kWh saved, equal to $2,000 for a 20% reduction, or 50% project cost.
Department of Energy (DOE) Electrification Program
The DOE Electrification Program offers rebates for insulation, air sealing and ventilation upgrades for eligible homeowners. Specifications include:
- 50% of the cost of insulation up to $1,600 for households with annual incomes of 80-150% of area median income.
- 100% of the cost of insulation up to $1,600 for households with annual incomes less than 80% of area median income.
Tax Credits for Builders
The federal government has enhanced the financial incentives available for builders like you who construct energy-efficient homes and structures. For new homes and units acquired on or after January 1, 2023, the base level tax credit will be specifically tied to ENERGY STAR® certification for single-family, manufactured and multifamily homes and either ENERGY STAR or the Zero Energy Ready Home requirements for single-family homes.
Take Advantage of the Residential Efficiency Tax Credit
- Builders can receive a credit of $2,500 for single family homes that meet ENERGY STAR® Version 3.1.
- A credit of $5,000 is available for homes that meet the Department of Energy (DOE) Zero Energy Ready Home Program.
- A builder credit of $500/$1,000 is available for constructing certified multifamily units. Incentives increase to $2,500/$5,000 when meeting prevailing wage requirements.
- Producers of manufactured homes are eligible for a $2,500 tax credit for meeting the applicable ENERGY STAR Manufactured New Homes program requirements
The tax credit amount applies until December 31, 2032. See your tax professional for details on how to qualify and claim this credit.