Energy Efficient Home Improvement Tax Credit

The Energy Efficient Home Improvement Tax Credit (Internal Revenue Code [IRC] §25C) provides homeowners with a tax credit for investments in certain energy efficiency retrofits, including spray foam insulation.

25C Today & In The Future

The Inflation Reduction Act (IRA) of 2022 reactivates and extended the 25C tax incentive through December 2022 and then expanded it under the IRA through 2032. Renamed the Energy Efficient Home Improvement Credit (EEHIC), installing spray foam insulation can net an annual tax credit of up to $1200.

Original 25C

Expired on 12/31/2021, but is retroactive through the end of 2022
Provides homeowners an incentive to retrofit their current home with energy efficient products
Tax credit of $500 (or 10% of the job, whichever is lower) one time only
Any work performed in 2022 is eligible for the old 25C tax credit
Must meet minimum 2009 International Energy Conservation Code requirements

EEHIC

01/01/2023 through 12/31/2032
Applies 30% of spray foam insulation and air seal solution up to $1,200
Homeowners can claim this credit annually. (ex: Insulate attic one year and basement the next)
Must meet IECC 2021 requirements regardless of local code requirements
Claim the credit on your year-end tax filing

Note: Your HBS spray foam contractor can provide additional clarity that your project complies with 2021 IECC in the area the foam is applied.

Benefits of HBS Spray Foam

Up to a 50% reduction in heating and cooling costs per year
Spray foam is an industry-leading building solution that seals and insulates in one application
Creates a quiet, comfortable environment by sealing all cracks, gaps, and voids in your home
Minimize the amount of dust, allergens, and outdoor noise entering the home

Get The Most Out Of Your Tax Credits

Homeowners have the option to file a claim for the 25C tax credit every year. This means a homeowner could install spray foam in their attic this year and in their crawlspace next year and claim the full tax credit each year. Take advantage of this opportunity and add energy-efficient upgrades to your home over time.

The spray foam must be installed per the 2021 code, regardless of the code in place at the state or local level.

FAQ

When does this program begin?

January 1, 2023

New requirements for the 25C tax credit become effective on January 1, 2023. The enhancements will provide a 30% or $1,200 (whichever is lower) tax credit for qualifying home energy efficiency upgrades that comply with the 2021 International Energy Conservation Code® (IECC®). Tax credits are for material only. Please notes, tax credits can only offset taxes owed. Unused credits can roll over to the following tax year.

When does the EEHIC program expire?

The 25C tax credit is funded through December 31, 2032.

Can I apply for more than one tax credit incentive?

You can apply for a tax credit of 30% of the cost for any energy-efficient home improvement (capped at $1200 per year) every year during the term of the incentive

How do I file for the tax credit?

Homeowners can apply for the 25C tax credit by filling out IRS Form 5695, Residential Energy Credits while doing their federal tax return. For information about Form 5695 or to find the actual form, visit: www.irs.gov/forms-pubs/about-form-5695. Note: This information is subject to change as the IRS issues new guidance.

How does spray foam insulation help me qualify for this tax credit?

When applied correctly by one of our authorized contractors, spray foam insulation can help reduce monthly heating and cooling costs by up to 50%, thus it is viewed as an energy-efficient application. The benefits of spray foam assure that your home meets the 2021 energy code to qualify for the tax credit.

What documents can I expect to receive from my contractor?

Fill out HBS Insulation Certificate form: here

What documents do I need to file for the tax credit?

The IRS currently requires IRS Form 5695. HBS recommends keeping a copy of your invoice. The recent changes require the IRS to issue new guidance. Requirements may change over the next 12 months.

How much can I receive in tax credit?

Up to $1200 once per year per energy-efficient application for the duration of the program

Where can I find a contractor to install spray foam insulation in my home?

Click on the following link to find an HBS-authorized spray foam contractor in your area: https://go.pardot.com/l/305691/2022-09-12/2fxmyv

Do open- and closed-cell spray foams qualify?

All spray foam insulation, when installed properly, “Checks the box” as an air seal and insulator allowing you to meet the 2021 energy code requirement.

Should I remove my existing traditional insulation before installing spray foam?

Yes. As an air seal, spray foam will change the thermal envelope which will encapsulate your existing traditional insulation. Traditional insulation, over time, acts as a filter collecting various amounts of debris thus the reason it should be removed.

Can I remain in my home when spray foam insulation is being installed?

No. People, other than the installers, and pets should not be in your home during installation. A time to re-occupy your home will be based on proper ventilation during installation. Refer to your authorized contractor at the time of installation for a re-occupancy time.

Can spray foam work together with other energy-efficient upgrades?

Absolutely. Using spray foam insulation will work with your building envelope and mechanicals improve energy efficiency. HBS spray foam insulation can reduce a home’s energy bills by up to 50%, allowing HVAC and solar systems to work more effectively.

Ready To Get Started?

Need a highly qualified contractor to start your spray foam insulation project? The Huntsman Building Solution experts are here to support you.

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Huntsman Building Solutions
10003 Woodloch Forest Drive
The Woodlands, Texas 77380

Telephone: 855.742.7227