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119-hr-2463119th CongressWALLET

Mechanical Insulation Installation Incentive Act of 2025

Sponsored By: Representative Sánchez, Linda T. [D-CA-38]

Introduced

Summary

10% labor tax credit for mechanical insulation. This bill would create a time-limited, nonrefundable tax credit equal to 10% of labor costs for installing qualifying mechanical insulation on U.S. depreciable mechanical systems that meet Reference Standard 90.1 and reduce energy loss. The credit would apply to amounts paid or incurred after December 31, 2025 and would terminate for costs paid after December 31, 2028. It would be treated as part of the general business credit and would bar a tax deduction for the portion of labor costs equal to the credit. If the credit exceeds the deduction amount, the excess would be charged to the taxpayer’s capital account.

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  • Building owners and managers: Could claim a 10% credit on labor when adding insulation to eligible mechanical systems that were placed in service at least one year earlier. This targets retrofits that cut energy loss.
  • Insulation contractors and workers: The credit specifically covers labor costs, including work on property assembled offsite, which may boost demand for installation services.
  • Business tax returns: The credit is nonrefundable and folded into the general business credit rules, and it changes how related labor costs are deducted or capitalized.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 1 benefits, 0 costs, 0 mixed.

10% credit for business insulation labor

If enacted, businesses could claim a nonrefundable tax credit equal to 10% of labor costs to install qualifying mechanical insulation (including insulation assembled offsite). The system would need to be in the U.S., used in business and depreciable, and first placed in service at least one year earlier. The installation would have to meet Reference Standard 90.1 and reduce energy loss. It would apply to amounts paid or incurred from Jan 1, 2026 through Dec 31, 2028, and be part of the general business credit. You could not also deduct the same labor costs; if you capitalized them, your capital account would be reduced by any excess credit.

Sponsors & CoSponsors

Sponsor

Sánchez, Linda T. [D-CA-38]

CA • D

Cosponsors

  • Rep. Fitzpatrick, Brian K. [R-PA-1]

    PA • R

    Sponsored 3/27/2025

Roll Call Votes

No roll call votes available for this bill.

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