Insulation is only considered an “Eligible Building Envelope
Component” if it is specifically and primarily designed to reduce
heat loss or gain of a dwelling unit when installed in or on the
dwelling unit.
The credit amount established by § 25C of the Internal Revenue Code is:

  • 10% of the amount paid or incurred by the taxpayer for qualified energy efficiency
    improvements installed during the taxable year.
  • Up to maximum credit of $500.00 for all taxable years (all improvements combined).
  • Allowed only for amounts paid or incurred to purchase the insulation.
  • Not allowed for amounts paid for onsite preparation, assembly, original installation labor,
    other components or sales tax.
  • The purchase must be made during the taxable year for which the credit is claimed.
  • Retroactive and with time limits, covering product in service after December 31, 2005 and
    before January 1, 2008.


The Energy Tax Credit information contained on the INTEGRITY site is not complete or
comprehensive. For the entire scope of information about the Credit for Non-Business Energy
Property § 25C, please visit: http://www.irs.gov/pub/irs-drop/n-06-26.pdf

Claiming Your Tax Credit

After establishing your eligibility to claim a Tax Credit for Non-Business Energy Property § 25C,
please complete the following to ensure accuracy:

  1. Request an invoice demonstrating the cost breakout of the insulation material from your
    contractor. This cost must exclude the cost of onsite preparation, assembly, original
    installation labor, siding or sales tax.
  2. Download the applicable Manufacturer's Certificate from the manufacturers website, as
    well as retaining the ENERGY STAR® labels from qualified products.
  3. Retain the contractor invoice, ENERGY STAR® labels and the Manufacturer's Certificate
    for your IRS records. You are not required to provide this documentation to the IRS, but
    you will be required to present it if audited.