Income Tax Deduction for the Installation of Building Insulation

July 15, 2022


A residential taxpayer is entitled to an Indiana income tax deduction on the materials and labor used to install insulation in a taxpayer’s principal place of residence in Indiana. 


The insulation deduction is limited to the cost of the insulation (including installation costs) or $1,000, whichever is less. The deduction must be taken for the tax year during which the materials were installed. Excess costs may not be carried forward to subsequent tax years. 

Eligible Technologies

This deduction includes the following forms of insulation: material made from fiberglass, rock wool, cellulose, Styrofoam, urea-based foam urethane, vermiculite, perlite, polystyrene, reflective insulation, extruded polystyrene foam, blown-in insulation, rolled insulation, sheet Styrofoam insulation, and wrap insulation. Other materials that qualify for this deduction include weather stripping, storm windows, storm doors, thermal pane windows, and caulking. 

The following materials do not qualify for the insulation deduction: automatic setback thermostats, flue opening modifications, mechanical furnace ignition systems, solar energy equipment (such as collectors, rock beds, and heat exchangers), wind energy equipment (such as windmills), geothermal energy equipment, furnace replacement burners, meters, wood burning stoves, sky lights, heat pumps, and temporary plastic window coverings. Materials which are primarily structural or decorative do not qualify for this deduction.


The materials must be installed in the taxpayer’s principal place of residence in Indiana. If the taxpayer’s principal residence is a rental property, the deduction is available only if the costs incurred for insulation are not reimbursed by the landlord. 

The portion of the residence being insulated must have been built at least three years prior to the taxable year for which the deduction is taken.

The materials must be new and not used as a replacement for other material. Materials replacing broken or worn-out materials do not qualify for this deduction. 

Process for Claiming the Deduction

The taxpayer must submit with the Indiana tax return invoices that document the cost of labor and materials used in installing the insulation. These invoices must also provide the names and addresses of the persons who performed the labor in installing the insulation. 

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Indiana
Incentive Type: Personal Tax Deduction
Web Site:
Start Date:
Eligible Renewable/Other Technologies:
  • Equipment Insulation
  • Caulking/Weather-stripping
  • Duct/Air sealing
  • Building Insulation
  • Windows
  • Doors
Incentive Amount: 100% of cost
Maximum Incentive: $1,000
Equipment Requirements: The materials must be new and not used as a replacement for other material


This program has 1 incentives
Technologies: Equipment Insulation, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Doors
Sectors: Residential, Multifamily Residential
Parameters: The incentive has a minimum of $1000.00


Name: Ind. Code § 6-3-2-5
Date Enacted: 01/01/1978
Name: Information Bulletin #43
Date Enacted: 03/01/2010


Name: Indiana Department of Revenue
Phone: (317) 232-2240

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.