Tax Credits for Insulating the Roof

Adding insulation is one of the most cost-effective ways to improve the energy efficiency of your home. In fact, most insulation projects pay for themselves within three to five years by lowering heating and cooling costs. To encourage homeowners to insulate the roof, many local and state agencies offer tax credits and financial incentives that can offset the cost of new insulation and help keep your home more comfortable.

Federal Tax Credits

If you installed roof insulation before Dec. 31, 2011, you may be eligible for a federal tax credit for 10 percent of the material cost, with a maximum credit amount of $1,500. This credit applies to materials only and only covers insulation installed during the 2011 calendar year. To take advantage of this credit, complete IRS Form 5695.

State Tax Credits

Nearly a dozen states offer tax credits for residents who add building insulation to their homes. Residents of Idaho can deduct 100 percent of the cost of adding insulation if their home was built before 1976. Montana offers a tax credit of up to 25 percent of the cost of adding insulation, with a maximum value of $500 per individual or $1,000 per couple. In Colorado, residents can take a tax credit equal to 30 percent of insulation costs up to $1,500. Oklahoma, Michigan, Kentucky, Virginia, Missouri, New Mexico and Oregon also offer state-level tax credits for adding building insulation.

Other State and Local Tax Incentives

If your state does not offer tax credits, you may still be able to find county- or city-level tax incentives to help offset the cost of adding roof insulation to your home. For example, the city of Lakewood, Colorado, offers residents a rebate of up to $600 to cover the cost of purchasing insulation. Check the U.S. Department of Energy website to learn about tax incentives in your community.

Financial Incentives From Utility Providers

In addition to state, federal and local tax credits, your new attic insulation may also qualify for rebate programs established by local utility companies. For example, the Concord, Massachusetts, Municipal Light Plant offers customers a rebate of 40 percent of the cost of new insulation, up to $1,000. Idaho Power offers a rebate of 15 cents per square foot of insulation added, and the Idaho Falls Power Company provides interest-free loans to help customers afford new insulation for their homes. Check with your utility provider or consult the U.S. Department of Energy website to find similar programs in your area.

Other Incentives

Roof insulation offers added benefits beyond tax credits and rebates. You'll also enjoy direct financial benefits in the form of lower heating and cooling costs. Improved energy efficiency also means your heating and cooling equipment doesn't have to work as hard, which can save you money on maintenance and replacement costs over time. Finally, you'll also enjoy a more comfortable home year-round, as well as the knowledge that you're doing your part to help protect the environment.