Thanks to the Inflation Reduction Act (IRA) of 2022, making energy efficiency upgrades to your Chicagoland home is more affordable than ever. Within the new legislation is a revitalized federal tax credit—now known as the Energy Efficient Home Improvement Tax Credit or the 25C tax credit—that makes qualifying services like insulation and air sealing more affordable.
The energy efficiency tax credit is available now and easy to claim on your annual tax return. The team of experts at ARC Insulation can walk you through the process with this guide, and provide you with a few tips to help you maximize your savings.
How the Inflation Reduction Act Energy Efficiency Tax Credit Works
The Energy Efficient Home Improvement Tax Credit is a federal tax credit that will reduce what you owe in federal income tax. This tax credit only affects your federal taxes (not state) and can be claimed by filing IRS Form 5695 and an itemized receipt from us—your insulation contractor—with your annual return. This tax credit is non-refundable, meaning that it can lower your federal taxes due, but it won’t result in a refund on its own.
The IRA tax credit allows you to claim a dollar-for-dollar amount worth up to 30% of the cost of insulation and air sealing materials—labor costs do not qualify. There is an annual cap of $1,200, however, you can claim the tax credit multiple years in a row from now until 2032 for separate home improvement projects. You can also get a $150 tax credit for an energy audit to find out where your home has inefficiencies. This ensures that the upgrades you make will have the greatest impact on your comfort and energy savings.
Combine Inflation Reduction Act Tax Credits With Chicagoland Rebates
In addition to the insulation tax credits available through the Inflation Reduction Act, there are several other local incentives that offer homeowners in Naperville and the surrounding area more ways to save. By combining the federal tax credit with local rebates, you can boost your savings on a variety of insulation services, like:
These local rebates are available from People’s Gas, Nicor Gas, and Naperville’s Energy Grant Program. The total rebate value varies by company and service provided.
Don’t Wait For Insulation Upgrades—Schedule a Consultation Today
Waiting to improve your home’s insulation means paying more than you need to for heating and cooling and missing out on the many benefits that insulation upgrades can provide for your home. By taking advantage of the federal tax credit combined with local rebates, you can save on making your home more energy efficient, comfortable, and healthy.
At ARC Insulation, we want to make sure you’re getting the most out of your home performance upgrades. That’s why we always recommend an energy audit before getting started with any home project to find out where your home needs insulation and air sealing the most. Our team of experts can help you through the process and provide all the necessary paperwork you’ll need to qualify for insulation tax credits and rebates.