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Adds new section 45BB establishing the mechanical insulation labor costs credit equal to 10 percent of mechanical insulation labor costs paid or incurred.
Amends section 38(b) to add the mechanical insulation labor costs credit as a component of the general business credit.
Adds a new subsection to section 280C disallowing a deduction for the portion of mechanical insulation labor costs equal to the credit and providing a similar rule where the taxpayer capitalizes rather than deducts such expenses.
Amends the table of sections for subpart D by adding an item for the new section (45BB).
Creates a new federal tax credit equal to 10% of the labor costs to install mechanical insulation on eligible mechanical systems. The credit is part of the general business credit, applies only to labor (not materials), and is available for a defined time window.
The law defines what counts as eligible insulation work and qualifying systems, prevents “double dipping” by disallowing a deduction for the portion of labor costs covered by the credit, and makes conforming updates to the tax code.
Referred to the House Committee on Ways and Means.
Introduced March 27, 2025 by Linda T. Sánchez · Last progress March 27, 2025