Federal Tax Credit for Attic Insulation

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Does the Inflation Reduction Act contain a tax credit for homeowners who have their attic insulation upgraded?

Absolutely, YES!

The great news is that this is a very robust tax credit for homeowners. The federal government is incentivizing energy efficiency upgrades, and boy does this one hit a homerun.

Let me be quick to say that I’m far from a tax consultant, and I never claimed to be strong in math or clipping coupons or shopping sales for rebates. Heck, I don’t even have cash-back credit cards!

You have been warned – before you believe me, talk to your tax preparer and do your own research.

Now, with my whimper out of the way – here is what I understand about the Inflation Reduction Act, as it applies to Georgia homeowners who are getting an attic insulation upgrade.

How to Calculate Your Inflation Reduction Act Tax Credit for Attic Insulation

The tax credit is 30% of the material cost, up to $1200.

The maximum tax credit for attic insulation is $1200.

You cannot include the cost of labor.

Example Calculation

For instance, let’s say Bird Family Insulation upgraded your attic insulation from 3” (R-6) to 15”, (R-50.) And let’s say that your invoice was $4456.

Generally speaking, we would calculate 70% of that invoice as your material cost ($3119.20). The tax credit allows for 30% of your material cost to qualify for the rebate, which totals $935.76 (30% x $3119.20 = $935.76).

So, the tax credit for this (example) invoice is $935.76!

Which is Better? Tax Credit or Tax Deduction?

According to ChatGPT, here is the difference between a tax credit and a tax deduction:

A tax credit is a dollar-for-dollar reduction of the income tax you owe, while a tax deduction reduces the amount of income on which you are taxed. Tax credits are generally more valuable than deductions because they directly reduce the amount of tax you owe, whereas deductions only reduce the amount of income that is subject to taxation. For example, a $1,000 tax credit would reduce your tax bill by $1,000, while a $1,000 deduction would only reduce your taxable income by $1,000, which may only result in a smaller reduction of your overall tax bill.

Need More Research? Follow This Link.

Here is a link to a 3-page government article that is a great place to start your research:
Click Here to Read!

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