Energy Efficiency Home Improvement Credit

Looking to make your home more energy-efficient and save money at the same time? The Energy Efficiency Home Improvement Credit makes upgrading your insulation even more rewarding. Thanks to the Inflation Reduction Act of 2022, homeowners now have greater access to federal tax credits for improving energy performance—especially with qualifying insulation upgrades.

At Koala Insulation of Superstition Springs, we specialize in helping homeowners in Arizona’s desert climate reduce their energy use, stay comfortable year-round, and take full advantage of available rebates and credits. In this blog, we’ll break down how the Energy Efficiency Home Improvement Credit works, what insulation projects qualify, and how you can claim your savings.

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What Is the Energy Efficiency Home Improvement Credit?

The Energy Efficiency Home Improvement Credit (IRC Section 25C) is a federal tax incentive that helps homeowners offset the cost of eligible energy-efficient upgrades. It was enhanced under the Inflation Reduction Act and is now more generous and accessible than in previous years.

Here’s what you need to know:

• The credit is nonrefundable, meaning it reduces the amount of tax you owe but does not result in a refund.
• It allows homeowners to claim 30% of the cost of qualifying improvements, up to an annual limit.
• The annual limit for insulation and air sealing products is $1,200.

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What Insulation Projects Qualify?

To be eligible for the credit, your insulation must meet standards set by the International Energy Conservation Code (IECC) and be installed in your primary residence (not a rental or vacation home). Qualifying products include:

✅ Insulation Materials

• Fiberglass batts and rolls
• Blown-in fiberglass or cellulose
• Spray foam insulation
• Rigid foam board insulation
• Mineral wool
• Reflective insulation and radiant barriers

✅ Air Sealing Products

• Weather stripping
• Caulking
• Spray foam sealants
• House wraps

All products must meet the manufacturer’s certification for energy efficiency. At Koala Insulation of Superstition Springs, we only install materials that meet or exceed these standards—making it easy for you to qualify for the credit.

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How Much Can You Save?

The Energy Efficiency Home Improvement Credit covers 30% of material costs for qualifying insulation and air sealing products, up to $1,200 per year. While labor costs aren’t included in the credit for insulation (unlike some HVAC upgrades), the savings are still significant.

For example:

• If you spend $2,500 on qualifying insulation materials, you could receive a $750 tax credit.
• If you spend $4,000, you could receive the maximum $1,200 credit.

Since the credit resets annually through 2032, you can plan multi-year upgrades to maximize your savings.

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Additional Incentives to Combine

In addition to the federal tax credit, homeowners in Arizona may also qualify for:

• Utility rebates from energy providers like SRP or APS
• State-level incentives (if available)
• Manufacturer rebates on specific insulation products

Koala Insulation of Superstition Springs can help you navigate both federal and local incentives to get the best return on your insulation investment.

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Why Insulation Is One of the Best Ways to Save

Insulation plays a crucial role in reducing heating and cooling costs—especially in Arizona’s desert climate. High-quality insulation helps:

• Block intense radiant heat from the sun
• Keep conditioned air inside
• Reduce wear on your HVAC system
• Maintain consistent indoor temperatures

According to the U.S. Department of Energy, proper insulation can cut your heating and cooling bills by up to 30%—so in addition to your tax credit, you’ll benefit from year-round energy savings.

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Ideal Areas of the Home to Upgrade

To make the most of your Energy Efficiency Home Improvement Credit, focus on high-impact insulation zones like:

Attic

Your attic is the #1 source of energy loss in most homes. We recommend:

• Blown-in fiberglass or cellulose to increase R-value
• Radiant barrier insulation to reflect desert heat
• Air sealing around vents and hatches

Walls

Wall insulation keeps your living space cool and comfortable. Options include:

• Spray foam insulation for superior air sealing
• Dense-pack cellulose for retrofits

Crawl Spaces and Rim Joists

These hidden areas can cause significant air leaks and moisture problems. Spray foam or rigid foam board can seal and insulate these trouble spots effectively.

Garages

An uninsulated garage can transfer heat into the home, especially if it’s attached. Insulating garage walls and ceilings can improve comfort in nearby rooms.

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How to Claim the Tax Credit

To take advantage of the Energy Efficiency Home Improvement Credit, follow these steps:

1. Save all receipts and documentation. Keep records of material costs and manufacturer certifications.
2. File IRS Form 5695 with your federal tax return for the year the insulation was installed.
3. Claim your credit based on the eligible portion of material costs (up to 30%).
4. Repeat annually for additional upgrades until 2032.

Consult with a tax professional to ensure you’re filing correctly and receiving the full benefit.

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Why Choose Koala Insulation of Superstition Springs?

We’re more than just an insulation company—we’re your partner in creating a more comfortable, energy-efficient home. Here’s what sets us apart:

• Free in-home evaluations
• Product recommendations that meet federal standards
• Expert installation tailored to desert climates
• Help with understanding and claiming available credits and rebates

We’ll help you plan your insulation upgrade in a way that maximizes energy savings and return on investment.

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Conclusion

The Energy Efficiency Home Improvement Credit makes it easier than ever to improve your home’s insulation while reducing your tax bill. With up to $1,200 in annual savings on qualifying insulation materials, plus energy savings that last for decades, there’s no better time to act.Call Koala Insulation of Superstition Springs at (480) 681-5151 or visit our website for a free estimate today. We’ll help you choose the right insulation for your home, climate, and budget—and ensure you get the most out of every dollar you invest.