Mechanical Insulation Installation Incentive Act of 2025

This bill would create a temporary federal tax credit equal to 10% of the labor cost to install mechanical insulation on qualifying mechanical systems. It covers the work of installing insulation and related products, even if the insulation was assembled offsite, as long as the installation reduces energy loss. The credit ends after December 31, 2028.

To qualify, the insulation must be installed on a system in the United States that’s part of business or industrial property, meet the 90.1 energy standard, and be added to equipment that has already been in use for at least one year.

• Who is affected: Businesses and building owners who pay for installing mechanical insulation on their systems.
• What changes: A 10% tax credit on labor costs for installing qualifying insulation; materials are not included.
• When: Through December 31, 2028.