No. The federal tax credit that covered insulation, the Energy Efficient Home Improvement Credit under Section 25C, is not allowed for any property placed in service after December 31, 2025, so insulation and air sealing installed in 2026 do not qualify. Public Law 119-21, signed July 4, 2025, which the IRS calls the One, Big, Beautiful Bill, ended it seven years ahead of the December 31, 2032 date it had been set to run through. Eligible insulation installed in 2025 can still be claimed on a 2025 return, or added later on an amended one within the IRS time limits. What helps pay for insulation in 2026 is state and utility programs: NYSERDA and the utilities in New York, the utility-run programs and Comfort Partners in New Jersey, and Energize CT in Connecticut.
Everything below comes from the law itself, the IRS’s own pages, forms and instructions, ENERGY STAR, the three states’ tax departments and each program’s official site, checked on October 23, 2026. It is general information, not tax advice. Confirm how any of it applies to your return with your tax preparer.
What the 25C Energy Efficient Home Improvement Credit covered
From January 1, 2023 through the end of 2025, the credit equaled 30% of certain qualified expenses for improvements to your main home, insulation and air sealing among them. The IRS lists the yearly limits:
- Insulation and air sealing materials: 30% of the cost, with no credit limit of their own other than the $1,200 annual maximum they share with exterior windows, skylights and doors, home energy audits, electrical panel upgrades and some heating, cooling and water heating equipment.
- Home energy audits: up to $150, inside the same $1,200.
- Heat pumps, heat pump water heaters, and biomass stoves and boilers: a separate $2,000 a year, for up to $3,200 in all.
- No lifetime limit. The maximum could be claimed every year eligible improvements were made, through 2025.
Four rules decided who could use it and on what:
- Materials only, not labor. The IRS says labor costs for installing building envelope components don’t qualify, and insulation is one. On an installed insulation job, only the material part of the invoice counted.
- An existing main home. The home had to be in the United States and be an existing home you improved or added onto, not a new home. The Form 5695 instructions say this part of the credit is only available for existing homes.
- Owners who live there. For insulation, the IRS’s questions-and-answers fact sheet on the credit says the home had to be owned and used by the taxpayer as a principal residence. A renter was not entitled to it, insulation put into a second home did not qualify, and landlords can never use the credit for homes they rent out but do not live in themselves.
- A qualifying product. The insulation or air sealing material had to be specifically and primarily designed to reduce the heat loss or gain of the home, vapor retarders and seals to limit infiltration included, and meet the energy code the IRS names: the 2021 IECC for anything placed in service in 2025. A component that provides structural support or a finished surface, such as drywall or siding, or whose principal purpose is something other than reducing heat loss or gain, did not count. It also had to be new, with you as its original user, and reasonably expected to stay in use for at least 5 years.
The credit was nonrefundable. The IRS puts it this way: you can’t get back more on the credit than you owe in taxes, and you can’t apply any excess to future tax years. Spray foam could qualify while the credit ran. ENERGY STAR’s list of bulk insulation products that can qualify includes expanding spray, along with batts, rolls, blow-in fibers, rigid boards and pour-in-place products.
When the insulation tax credit ended, and why
Section 70505 of Public Law 119-21, titled “Termination of energy efficient home improvement credit,” replaced the credit’s 2032 end date with property “placed in service after December 31, 2025.” The IRS’s FAQ on the law (fact sheet FS-2025-05) says it plainly: the credit will not be allowed for any property placed in service after December 31, 2025. The 2025 instructions for Form 5695 say the credit is allowed for property placed in service through December 31, 2025, and that you can’t claim it for expenditures or property placed in service after that date.
What counts is when the work was installed, not when it was paid for. The IRS says you must claim the credit for the tax year when the property is installed, not merely purchased, and the Form 5695 instructions treat costs as paid when the original installation is completed. Read together, a deposit paid in December 2025 on a job finished in January 2026 points to 2026, when there is no credit, and a job finished in December 2025 and paid off in January 2026 points to 2025. The IRS gave a plain no to the same deposit question for the Residential Clean Energy Credit, Section 25D, which covers solar and whose installation-date rule the insulation credit borrows under the law. If your job ran across the new year, take your contract and invoices to your tax preparer.
The same law ended the rest of Section 25C on the same date, which takes in heat pumps, windows, doors and home energy audits. It also ended the Residential Clean Energy Credit, Section 25D, for clean energy property such as solar, for any expenditures made after December 31, 2025, and the New Energy Efficient Home Credit that builders claim, Section 45L, for homes acquired after June 30, 2026.
Some official pages haven’t caught up. The IRS’s questions-and-answers fact sheet on the credit, written before the law passed, still shows the old end dates, though its answers on the 2025 rules for this credit, such as who qualifies, labor, the energy code and manufacturer numbers, match the 2025 Form 5695 instructions, which point readers to it. The IRS’s main page for the credit describes the cutoff two slightly different ways, as improvements made “through” and property placed in service “before” December 31, 2025. The law itself, the IRS FAQ on it and the 2025 Form 5695 instructions all give the December 31, 2025 cutoff. A quote, flyer or online calculator that still subtracts a 30% federal credit from a 2026 insulation job is out of date.
Claiming insulation installed in 2025
If eligible insulation or air sealing went into your main home in 2025, the credit is claimed on Form 5695, Residential Energy Credits, Part II, filed with your 2025 federal return. Line 18 is the insulation line: the cost of the insulation and air sealing material, times 30%, up to $1,200. What the IRS says about records and costs:
- The manufacturer’s certification. The Form 5695 instructions say you can rely on a manufacturer’s written certification that a building envelope component is eligible, and tell you not to attach it to your return but to keep it for your records. ENERGY STAR calls it a Manufacturers Certification Statement, and says air sealing products could also qualify as long as they came with one.
- Receipts and installation records. The IRS’s consumer guide to the credit says to retain your purchase receipts and installation records. Because labor doesn’t count, an invoice that shows the material cost apart from the labor matters, and the IRS notes that an itemized invoice or receipt from your contractor can help.
- No manufacturer number for insulation. From 2025, exterior windows, skylights and doors, electrical panel upgrades and the qualifying heating, cooling and water heating equipment needed a qualified manufacturer identification number on the return. Insulation is the exception: the IRS says insulation and air sealing materials or systems are the only types of qualifying property that do not have to meet the qualified manufacturer and PIN requirements, and the insulation line on the 2025 Form 5695 has no box for one.
- Rebates and incentives. The Form 5695 instructions say a subsidy from a public utility for buying or installing an energy conservation product, if it wasn’t included in your income, reduces the cost before you figure the credit, even if a contractor received it on your behalf. Energize CT says the value of its rebates is deducted from the project cost before the tax credit is figured. Money from the federal Home Energy Rebate programs, which include HEAR, is treated by the IRS as a rebate, so it comes off the cost too. State energy efficiency incentives, the IRS adds, are generally not subtracted unless they qualify as a rebate or purchase-price adjustment under federal tax law, and such incentives could be included in your gross income instead. Which bucket a program payment falls in is a question for your tax preparer.
- Program financing. The Form 5695 instructions say amounts provided by subsidized energy financing, meaning financing under a federal, state or local program whose principal purpose is subsidized financing for projects to conserve or produce energy, can’t be used to figure the credit. If a 2025 job was paid with a 0% program loan or on-bill repayment, ask your tax preparer whether that part counts.
For most people the deadlines for a 2025 return have passed: April 15, 2026, or October 15, 2026 with an extension. If you filed without claiming the credit, the IRS says that to claim a refund you generally must file an amended return, Form 1040-X, within 3 years after the date you filed your original return or 2 years after the date you paid the tax, whichever is later; if you filed early, it says to count from the April tax deadline. Its fact sheet on this credit confirms that a return that left it out can be amended to claim it. If your 2025 return isn’t filed at all, talk to your tax preparer now.
State tax credits for insulation in New York, New Jersey and Connecticut
None appears on the three states’ official lists.
- New York: the Department of Taxation and Finance lists its “green” income tax credits as the clean heating fuel credit, the conservation easement credit, the geothermal energy systems credit and the solar energy system equipment credit. Insulation and weatherization are not on its list.
- New Jersey: the Division of Taxation’s list of Gross Income Tax credits includes no insulation or energy efficiency credit, and the 2025 NJ-1040 instructions don’t mention one.
- Connecticut: the 2025 CT-1040 instructions name no insulation credit. Connecticut also repealed its sales and use tax exemption for residential weatherization products, insulation included, for sales on and after January 1, 2016, the Department of Revenue Services says, so those sales are subject to sales and use tax.
What still helps pay for insulation in 2026
With the federal credit gone, the help for insulation and air sealing comes from state and utility programs. Each has its own rules. Most start with an assessment or a program visit, and apart from Energize CT’s self-install rebate they pay through their own participating or assigned contractors, so settle which program you are using before you sign a contract. Our New York and New Jersey rebates page and Energize CT rebate guide for Connecticut have more on the programs in each state. Here is how each program describes itself.
New York: Westchester, the Hudson Valley and Long Island
- NYSERDA Comfort Home offers incentives on “seal and insulate” packages for homeowners of one- to four-family homes who pay into the System Benefits Charge on their electric bill, through NYSERDA-approved participating contractors, starting with a no-fee consultation. The home must meet the conditions of the entire package to get the incentive. Its program manual says homes served by PSEG Long Island are not eligible for Comfort Home, homes with municipal electric service are not eligible for the package incentives, and income-eligible customers should use EmPower+ for air sealing and insulation.
- NYSERDA EmPower+ is for income-eligible owners and renters of one- to four-family homes, with household income at or below 80% of the state or area median, or taking part in a utility payment assistance program: a no-cost home energy assessment, a contractor assigned by the program, and funding toward energy improvements to their primary residence, including air sealing and insulation. NYSERDA says income-eligible New Yorkers can also receive Home Electrification Appliance Rebate (HEAR) incentives through EmPower+.
- PSEG Long Island offers a free Whole House Energy Assessment, which you book by choosing one of its participating contractors, and says you must use one of them to be eligible for rebates. Insulation must be accompanied by blower-door-assisted air sealing to BPI standards. For income-eligible homeowners it also encourages contractors that take part in EmPower+.
- Con Edison (Westchester): its Weather Ready program is no longer accepting applications. Con Edison points Westchester homeowners to NYSERDA’s Comfort Home program and says to stay tuned for residential weatherization incentives for 2027.
- Orange & Rockland points its New York customers to Comfort Home, to EmPower+ for income-eligible households, and to an ORU Home Upgrades offering.
- Central Hudson and NYSEG customers are among those NYSERDA lists for Comfort Home; for each utility’s own offers, check its pages.
New Jersey
- Whole Home Energy Solutions: New Jersey’s investor-owned electric and gas utilities run this whole-house program, which includes insulation and air sealing performed only by Building Performance Institute (BPI)-certified contractors. PSE&G says its version is for owners of one- to four-family homes, that the contractor you select sets the cost of the initial assessment, and that homeowners may receive rebates and may qualify for interest-free on-bill repayment.
- Home Weatherization: for low- to moderate-income customers, the utilities offer weatherization upgrades at no cost to the homeowner.
- Comfort Partners: a free program for households with significant energy use and income at or below 250% of the federal poverty guidelines; the measures it recommends, including insulation upgrades and air sealing, come at no cost. Registrations are open.
- Federal Home Energy Rebates: New Jersey’s page says its IRA rebate programs are in development and not yet open for applications, and that residents should not assume projects already underway or completed will qualify.
Connecticut
- Energize CT Home Energy Solutions: an in-home energy assessment by an authorized contractor, with on-the-spot energy-saving improvements, for residential customers of Eversource, UI, CNG and SCG. Since April 1, 2026 the first visit has a copay, a home is eligible if it hasn’t received the service in the last six years, and Energize CT says there may be a waiting list.
- Energize CT insulation rebate (2026): the insulation must be recommended during a Home Energy Solutions visit and approved before installation, and the professional-installation rebate requires an approved contractor from the Energize CT Insulation Installers Network; self-installed insulation is inspected before a rebate is paid. The eligible areas are attic floors, floored-over attics, above- and below-grade walls, basement and garage ceilings and rim joists, each with a limit on the insulation already there and a minimum R-value afterward. Roof decks are not on the list, and Energize CT’s 2026 rebate terms say attic roof decks and rafters do not qualify. The rebate page shows the incentive running January 1 to December 31, 2026, while the 2026 terms allow installation through March 31, 2027; our Energize CT insulation rebate guide has the details.
- HES Income-Eligible: households with a combined gross income below 60% of the state median for their family size may qualify for a no-cost energy assessment and, depending on the home’s needs, up to 100% off approved insulation projects, with the contractor assigned by the utility.
- Federal HEAR and HER rebates: the state energy department’s page, last updated July 2025, says they are not currently available.
Common questions about the insulation tax credit
Is there an insulation or energy tax credit in 2026?
No federal credit for insulation or other home energy-efficiency work. The IRS says the Energy Efficient Home Improvement Credit, Section 25C, will not be allowed for any property placed in service after December 31, 2025, so insulation and air sealing installed in your home in 2026 do not qualify. The same law ended the Residential Clean Energy Credit, Section 25D, for expenditures made after December 31, 2025, so both credits the IRS lists as home energy tax credits are closed for 2026 work. New York, New Jersey and Connecticut list no state income tax credit for insulation either.
When did the 25C tax credit end?
For property placed in service after December 31, 2025. Public Law 119-21, signed July 4, 2025, moved the end date up from 2032. Insulation placed in service through December 31, 2025 can still be claimed on a 2025 return.
Can I still claim insulation installed in 2025?
Yes, if it met the IRS rules: on Form 5695 with your 2025 federal return, 30% of the insulation and air sealing material cost, up to $1,200, a cap shared with windows, doors, energy audits and some equipment, and never more than the tax you owe. The filing deadlines have passed for most people, but the IRS says that to claim a refund you can generally amend within 3 years after filing the original return or 2 years after paying the tax, whichever is later. Confirm with your tax preparer.
What paperwork do I need for the 2025 insulation credit?
Records that back up the credit. The IRS says you can rely on the manufacturer’s written certification that the product is eligible, and to keep it with your records rather than attach it, and it says to retain purchase receipts and installation records. An invoice that separates materials from labor helps, because labor doesn’t count. Insulation needs no manufacturer identification number on the return.
Did the insulation tax credit cover labor?
No. The IRS says labor costs for installing building envelope components don’t qualify for the credit, and insulation and air sealing are building envelope components. Only the material cost counted, at 30%, up to the $1,200 annual limit.
I paid a deposit in 2025 but the insulation went in during 2026. Does it count?
Generally not. The IRS says the credit is claimed for the tax year the property is installed, not merely purchased, and the Form 5695 instructions treat costs as paid when the original installation is completed. A job completed in 2026 falls after the cutoff. Ask your tax preparer about your own dates.
Did spray foam qualify for the federal tax credit?
While the credit ran, it could. ENERGY STAR lists expanding spray among the bulk insulation products that can qualify, along with batts, rolls, blow-in fibers and rigid boards, if the product met the IRS’s energy code criteria, and only the material cost counted. Spray foam installed in 2026 gets no federal credit, the same as any other insulation.
Can renters or landlords claim the insulation tax credit?
No. The IRS fact sheet on the credit says the home had to be owned and used by the taxpayer as a principal residence, so a renter was not entitled to it for insulation, and landlords can never use the credit for homes they rent out but do not live in themselves. The credit has ended for 2026 work in any case.
Is there a New York, New Jersey or Connecticut tax credit for insulation?
None appears on the states’ official lists. New York’s green credits cover clean heating fuel, conservation easements, geothermal systems and solar equipment; New Jersey’s and Connecticut’s income tax credit lists include no insulation credit. In all three states the help comes through utility and state programs instead.
What replaced the insulation tax credit?
No federal tax credit did. The help comes from state and utility programs: NYSERDA Comfort Home, EmPower+ (which also carries HEAR incentives for income-eligible households) and PSEG Long Island in New York, the utilities’ Whole Home Energy Solutions and Comfort Partners in New Jersey, and Energize CT in Connecticut. Most require their own assessment and their own contractors.
Insulation quotes in New Jersey, Connecticut, the Hudson Valley and Long Island
We quote insulation and air sealing on what the house needs, with a written scope that lists the material and depth for each area. If a program assigns its own contractor or requires one from its list, check that list before you sign. The energy audit is free. It is our own, not a utility or state program’s assessment, so if you are counting on a rebate, book the program’s visit first. We don’t give tax advice; your tax preparer has the last word on your return.
Call 914-554-2289 or use the contact form, 8am–8pm, seven days. The Home Insulators is family-owned, based in New Rochelle, NY since 2015, with a 100-plus-person in-house crew that never subcontracts. We work across all of New Jersey, all of Connecticut, New York’s Hudson Valley and Long Island; see our service area.