Each section below includes a brief overview of the applicable programs and a wealth of resources for using foam plastic insulating sheathing continuous insulation to achieve a variety of financial incentives for energy efficient construction.

While two federal incentives (45L and 179D) expired on June 30, 2026, that does not necessarily mean the end of all clean energy support. On April 23, Rep. Brian Fitzpatrick, joined by original cosponsors Mike Lawler, Max Miller and Mike Carey, introduced the American Energy Dominance Act (H.R. 8477). The bill would reinstate the 179D Energy Efficient Commercial Buildings Deduction without a scheduled expiration and extend the 45L New Energy Efficient Home Credit through December 31, 2032. The bill has been referred to the House Ways and Means Committee but has not yet received committee action. It has since added Reps. Bresnahan, Garbarino and Kiggans as cosponsors. Consider reaching out to your House Representative in support of this proposed legislation.

In addition, many states, utilities, and local programs may offer their own rebates and tax credits, which can potentially be combined with federal incentives. It is recommended to investigate options available in your specific area.

 

New Residential Construction

image of newly built home exterior

The 2022 Inflation Reduction Act (IRA) amended Internal Revenue Code Section 45L, Tax Credit for Energy Efficient New Homes, to provide taxpayers with a tax credit for eligible new or substantially reconstructed homes that meet applicable ENERGY STAR home program or DOE Zero Energy Ready Home (ZERH) program requirements. In 2025, the One Big Beautiful Bill Act (Public Law 119-21) changed the termination date of the 45L tax credit from December 31, 2032, to June 30, 2026.

The 45L provisions included two tiers of credits – $2500 or $5000 – with the higher credits for eligible homes and dwelling units certified to applicable ZERH program requirements. The qualified contractor – typically the developer, builder or homeowner – is the only person who can claim the 45L tax credit and must own the unit at the time of construction or improvement. This tax credit is available for eligible dwelling units acquired before July 1, 2026. 

 

Energy Star logo

For homes and apartments acquired after January 1, 2023, and before July 1, 2026, earning the Section 45L New Energy Efficient Home Credit requires certification to an eligible version of the ENERGY STAR program requirements: 

For additional details related to this tax credit, please visit the IRS website. 

FPIS ci Helps Achieve the Following:

ENERGY STAR Version 3.1: The baseline for a compliant building uses R20+5ci (2x6 wall) or R13+10ci (2x4 wall) for Climate Zones 6-8, which is the same as required by the 2012 IECC or 2012 IRC Chapter 11 envelope provisions.

ENERGY STAR Version 3.2: The baseline for a compliant building use R20+5ci (2x6 wall) or R13+10ci (2x4 wall) for Climate Zones 4-8, which is the same as required by the 2021 IECC or 2021 IRC Chapter 11.

Compliance with Energy Star version 3.2 or later version is recommended (and required for homes built after December 31, 2024) for improved energy savings. Unfortunately, both versions allow the continuous insulation (ci) component to be traded-off by improving the energy efficiency performance of other parts of the building. This can result in walls that are more susceptible to moisture damage in colder climates and subject to problems caused by thermal bridging, which the use of ci helps to prevent.  Whereas, increasing ci R-value in any climate will improve moisture and energy performance along with other benefits. Also, use of FPIS ci as the water resistive barrier system and an exterior air barrier can help meet air leakage requirements as well as eliminate the cost of separate materials to address these requirements for the tax credit. Refer to the resources listing below as well as the Cost-effective Ways to Use FPIS ci for Tax Credit Compliance and Additional Resources sections below for more information.

Explore these resources for additional information and technical support to optimize your walls to achieve ENERGY STAR compliance and qualify for the $2,500 tax credit:

In 2025, DOE’s Zero Energy Ready (ZERH) Program became the DOE Efficient New Homes Program. Every certified DOE Efficient New Home represents a whole new level of performance with rigorous requirements that ensure outstanding levels of energy savings, comfort, health, and durability. A DOE Efficient New Home is a high-performance home that is so energy efficient that a renewable energy system could offset most or all the home's annual energy use. Each home meets rigorous efficiency and performance criteria and is verified by a qualified third-party as part of the certification process. Most types of new homes in the U.S. are eligible to participate, and certified homes are eligible to receive the federal 45L tax credit - up to $5,000 per home, for homes acquired before July 1, 2026.

See additional details related to Section 45L Tax Credits for DOE Efficient New Homes.

FPIS ci Helps Achieve the Following:  

The program has a mandatory requirement for the building envelope to meet or exceed the performance for the building envelope required by the 2021 IECC residential provisions. Consequently, the minimum compliant wall assemblies for Climate Zones 4-8 are R20+5ci (2x6 wall) or R13+10ci (2x4 wall). Increasing ci R-value in any climate will improve moisture and energy performance along with other benefits. Also, use of FPIS ci as the water resistive barrier system and an exterior air barrier can help meet air leakage requirements as well as eliminate the cost of separate materials to address these requirements for the tax credit. Refer to the Cost Effective Ways to Use FPIS ci for Tax Credit Compliance and Additional Resources sections below for more information.

Explore these resources for additional information and technical support to optimize your walls to achieve DOE ZERH program compliance and qualify for the $5,000 tax credit:    

In addition to savings through tax credits, using FPIS ci can save up to several thousand dollars in construction costs due to its multi-functional capabilities to reduce first cost while complying with either Tier outlined above. Consider these resources:

 

Home Improvements

image of remodeled home exteriorInsulation is a cost-effective, energy-saving measure that increases building comfort while reducing greenhouse gas emissions and contributing to a green environment. According to the Insulation Contractors Association of America (ICAA), there are over 78 million homes that today remain under-insulated, due in large part to past energy codes being less stringent than today’s standards. Now is a great time to consider bringing insulation levels up to current code requirements to increase your home’s comfort and save money on energy bills for years to come.

While the 25C Energy Efficient Home Improvement Credit expired on December 31, 2025, the expiration of these federal incentives does not necessarily mean the end of all clean energy support. Many states, utilities, and local programs may offer their own rebates and tax credits, which can potentially be combined with federal incentives, so it is recommended to investigate options available in your specific area. 

The HOMES Rebate Program provides rebates for eligible whole-home energy upgrade projects for households at all income levels. American households can save up to $8,000* on home upgrades based on modeled energy savings levels with a minimum savings of 20%. HOMES offers several possible pathways to affordable upgrades including insulation, air sealing, heating and cooling equipment, water heaters, duct sealing, appliances, and lighting. HOMES rebates provide Americans with household upgrades that can lower monthly energy bills while improving comfort and quality of the home.

NOTE: While the HOMES program is tied to federal funding, it is generally managed at the state level and typically available on a first-come, first-served basis until funds are depleted. Therefore, it is recommended to act promptly as these rebate funds could be exhausted before the official expiration date. 

Resources   Analysis of Updated Guidance (2026)

The HEEHR Program provides rebates for the purchase and installation of appliances and building envelopes materials to reduce American homeowner energy bills. American households can save up to $14,000 on efficient upgrades that can lower energy bills and improve comfort and safety of the home. HEEHR offers rebates at point of sale either at retail outlets or through contractors. HEEHR can be utilized for insulation, air sealing, ventilation, electric wiring and load service center upgrades, electric heating and cooling upgrades, and efficient electric appliances. The HEEHR program is designed to ensure homeowner savings, emphasizing the importance of insulating and sealing the home prior to upgrading heating and cooling to maximize savings.

NOTE: While the HEERA program is tied to federal funding, it is generally managed at the state level and typically available on a first-come, first-served basis until funds are depleted. Therefore, it is recommended to act promptly as these rebate funds could be exhausted before the official expiration date.  

Resources   Analysis of Updated Guidance (2026)

In operation for more than 40 years, WAP provides grants to cover the cost of home weatherization, typically for families earning less than 200% of the federal poverty level (FPL). In addition to $1.1 billion in funding from DOE and other sources, the 2021 Infrastructure Investment and Jobs Act (IIJA) included $3.5 billion for WAP to be spent over several years. Funding per house or apartment is typically capped at an average of about $8,000.

More details

 

Commercial Buildings

image of a commercial office buildingThe 2022 Inflation Reduction Act (IRA) and 2021 Infrastructure Investment and Jobs Act (IIJA) allocated more than $1 billion for programs and tax incentives to improve the energy efficiency of and reduce greenhouse gas (GHG) emissions from new and existing commercial buildings. 

Under the One Big Beautiful Bill Act, the 179D Energy Efficient Commercial Building Deduction does not apply to projects where construction begins after June 30, 2026. Construction on your energy-efficient commercial building project must have started on or before this date to be eligible for the deduction. 

 

 

A long-standing federal tax provision that IRA reworked and made more generous, the 179D tax deduction is now $0.50–5.00 per square foot (/sf) of floor area for owners of new and improved energy-saving commercial buildings, depending on the percentage of energy savings and whether the contractor pays prevailing wages. As of January 1, 2023, the maximum deduction increases to $5/sf, the minimum savings threshold is reduced to 25%, and there is a new
provision for retrofits of existing buildings. 

More details

 

Disclaimer: The information provided here does not constitute professional tax advice or other professional financial guidance. It should not be used as the only source of information when making decisions regarding design, purchasing, investments, or the tax implications of new home construction, or when executing other binding agreements. In the event that there is conflict between information provided on this webpage and guidance or notices published by IRS, the information published by IRS shall take precedence.