Did the Federal Insulation Tax Credit End? What Arizona Homeowners Can Still Claim in 2026

Yes, it ended. As of September 2026, there is no federal tax credit for insulation installed this year. The Energy Efficient Home Improvement Credit, the one tax people call 25C, used to cover 30% of what you paid for insulation and air sealing materials, up to $1,200 a year. A federal law signed in July 2025 cut it short, and it stopped with the last job finished in 2025.

That’s the short answer, and a lot of the internet hasn’t caught up to it yet. But “it ended” isn’t the whole story. There’s still one federal claim some Phoenix East Valley homeowners can make in 2026, and there are Arizona programs still paying toward insulation this year.

One thing up front. We insulate attics, we don’t prepare taxes. Everything below comes from the IRS, the State of Arizona and SRP’s own pages, checked in September 2026, and we’ve linked the sources so you can read them yourself. For anything about your own return, talk to whoever does your taxes.

What ended, and exactly when

When 25C was expanded in 2022 it was set to run into the 2030s. The federal budget law signed on July 4, 2025 (Public Law 119-21) moved the end date up to the close of 2025. The IRS puts it plainly in its guidance on the change: the credit is not allowed “for any property placed in service after December 31, 2025.”

“Placed in service” is the phrase that catches people, so here’s what it means. The IRS defines it as the point when “the original installation of the item is completed.” Not when you signed the contract. Not when you paid the deposit. When the crew finished the job.

The IRS spells out what that means for anyone who paid late in 2025 and got installed in 2026: “If installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25C credit.” Paid in December, insulated in January, no credit.

The same credit also covered up to $150 of a qualified home energy audit. That ended on the same date.

Why so many pages still say you can claim it

Most of what ranks for this question was written in 2025, when the credit was real and the deadline was the news. Some of it still reads “right now, homeowners can receive” a 30% credit. Even where a page does give the 2025 end date, the line Google shows in search results is often just “you can claim 30%,” and the date is a click away.

None of that was wrong when it was written. It’s just old. So if you land on a page telling you this year’s attic job earns 30% back, check the date at the top before you plan around it.

What you can still claim in 2026: work finished in 2025

This is the part almost nobody mentions. If your insulation job was completed in 2025, it’s claimed on your 2025 tax return, and 2025 returns are filed in 2026. The IRS is clear that “you must claim the credit for the tax year when the property is installed, not merely purchased.”

Most people filed that return back in April. Three situations are still open:

• You filed an extension. Extended 2025 returns are due October 15, 2026. If a 2025 insulation job isn’t on it yet, it can still go on.
• You already filed and forgot it. You can amend. The IRS allows an amended return within 3 years after the original was filed, or 2 years after the tax was paid, whichever is later.
• The job was in 2023 or 2024. The credit applied to those years too, so the same amendment window can reach back to them.

A few rules decide how much it’s worth. The credit is 30% of the cost of the insulation and air sealing materials. The IRS says installation labor doesn’t count, so the number that matters is the material cost, not the invoice total. It sits inside a $1,200 limit for the whole year, shared with things like windows and doors. And you can’t carry any unused credit forward to a later year.

It’s claimed on Form 5695, Part II. If you’re going back to an old job, ask your installer for an invoice that shows the material cost separately from the labor. That split is what your tax preparer will need.

One small thing that makes insulation easier than most items: starting with 2025 installs, many other products needed a manufacturer ID number to qualify. The IRS says insulation and air sealing materials are the only category that didn’t.

What’s left for insulation installed in 2026

Nothing federal on your tax return. But a tax credit was never the only kind of help, and the two that are left work differently. They’re rebates: money off the job, not money back at tax time, and they don’t depend on how much tax you owe.

Efficiency Arizona

This is the state’s home energy rebate program, run by the Governor’s Office of Resiliency with federal Home Energy Rebates funding. It’s a separate program from 25C and it didn’t end along with it.

As of September 2026, the program’s website says applications are still being accepted. Its published list of rebates includes insulation, air sealing and ventilation, up to $1,600. Eligibility is based on household income, and insulation and air sealing go through the program’s contractor pathway rather than a store coupon.  Here at Koala Insulation of the East Valley, we are approved contractors for the Efficiency Arizona Program.

Two cautions. First, the rules changed on September 1, 2026, including new insulation and air sealing standards that may be required alongside heat pump rebates, so anything you read about it from before this month may be out of date. Second, the program was paused in early 2025 when federal funding was held up. It has since reopened, but that’s a good reason to confirm the current status on efficiencyarizona.com before you count on it.

SRP and APS

SRP runs an insulation rebate for its residential electric customers, and as of this month it’s still offered. SRP’s rules are specific: it covers attic insulation only, it has to be paired with air sealing, and the work has to be done by a participating SRP Insulation program contractor who is BPI-certified and licensed in Arizona. Koala Insulation is one of the top SRP contractors fulfilling insulation projects under this rebate program.  It’s aimed at attics that are currently below R-19, brought up to R-38, and the rebate comes straight off your invoice.

We’re not going to print a dollar figure for it, because utility rebate amounts change and a number on a blog post goes stale faster than attic insulation does. The current amount is on SRP’s insulation rebate page. If you’re on APS, check aps.com for what’s currently offered in your area, since their programs change too.

Whether a state rebate and a utility rebate can both apply to the same job depends on each program’s rules, not on the contractor. Ask before you sign, and get the answer in writing.

Be wary of the “before it’s gone” pitch

Searches for this credit climb every fall and peak around the holidays and tax season. That’s exactly when you’ll hear someone say you’d better insulate now to lock in 30% back. For a 2026 install, there’s nothing to lock in. It’s already gone.

If anyone quoting your attic uses the federal credit as a reason to sign this year, that’s your cue to ask which credit they mean, and to go read the IRS page for yourself.

Is it still worth insulating without the credit?

For most Phoenix Valley attics, the credit was never the main reason to do it. It only ever covered part of the materials, capped at $1,200 a year. The real return is the one that shows up on your electric bill from April into October, when the attic above your ceiling is sitting at 160 degrees and the air conditioner is trying to hold 76 underneath it. That return didn’t go anywhere when the tax credit did.

If you’re weighing it, our Phoenix Easst Valley attic insulation cost guide walks through what a job here actually costs and why quotes vary, and our comparison of blown-in, spray foam and batt covers which one makes sense for your house.

Questions we get

Can I get a tax credit for insulation in 2026?

Not for insulation installed in 2026. For a job that was finished in 2025 or earlier, yes, on that year’s return, including by extension or amendment.

I paid in December 2025 but the crew came out in January. Do I qualify?

No. The IRS goes by when installation was completed, and it addresses this exact case: if installation finished after December 31, 2025, the expense is treated as made after that date and the credit isn’t allowed. Paying early doesn’t move the date.

Is insulation tax deductible instead?

Not in the way people usually mean. The federal benefit for your home was a credit, not a deduction, and it’s ended. Rental property and business use are their own questions with their own rules, and those belong with your tax preparer, not an insulation company.

Will Congress bring it back?

We don’t know, and nobody selling insulation does either. Plan around what’s in the law today.

What form do I use for a 2025 job?

Form 5695, Part II, filed with your 2025 return. The IRS page for the Energy Efficient Home Improvement Credit has the details, and the IRS FAQ on the 2025 law change covers the end date.

If you’re planning an attic job this year

The credit’s gone, but the heat isn’t. If you want to know where your attic stands, a free evaluation will tell you what’s up there, how deep it is, and whether it’s worth doing anything at all. If you’re an SRP customer, we’ll also tell you whether your attic is the kind SRP’s rebate is aimed at.

Koala Insulation of The East Valley is a locally owned, family-run business, co-owned by brothers Bill and Jim Villani right here in Chandler. As a licensed contractor, AZ ROC #346944, and an SRP approved contractor, we bring credentials homeowners can verify, backed by BPI certification. We handle blown-in attic insulation and air sealing across the Phoenix East Valley, backed by the Koala Insulation Limited Lifetime Guarantee. The full range is on our services page.

We’re proud to serve the neighborhoods we call home: Phoenix, Mesa, Chandler, Gilbert, Tempe, Scottsdale, Queen Creek, San Tan Valley, Ahwatukee, Apache Junction and Maricopa.

Evaluations are free. Call (480) 900-7274 and we’ll tell you what your attic is actually doing.

Last verified: September 22, 2026. Program rules and amounts change; check each linked source before you rely on them.