The Big Beautiful Bill officially ended federal tax credits for several energy-efficient home improvements, including solar panels and new insulation.
While the 25C Energy Efficient Home Improvement Credit, which allowed Pennsylvania homeowners to offset 30% of qualifying insulation material costs (up to $1,200), is gone, there are still several ways to budget for new insulation upgrades.
Several utility rebate programs are available through PPL for home improvement projects that reduce energy usage, and the Pennsylvania Weatherization Assistance Program (WAP) helps fund energy-efficient projects for income-qualifying households.
Pennsylvania is also set to distribute up to $300 million through the Penn Energy Savers program, which would provide rebates for qualifying energy-efficiency projects.
In this guide, you’ll learn what tax credit and rebate programs are available to provide financial relief for energy-efficiency projects in Pennsylvania, including upgrading your insulation or air sealing.
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Did the Federal Insulation Tax Credit Go Away?
The Section 25C Energy Efficient Home Improvement Credit officially expires on December 31, 2025.
The credit was created as part of the Inflation Reduction Act of 2022, which extended it through 2032.
However, on July 4, 2025, the One Big Beautiful Bill Act (OBBBA, Public Law 119-21) was signed into law. Among its provisions, the OBBBA accelerated the termination of several residential energy tax credits, including Section 25C.
Insulation projects completed in 2026 do not qualify, regardless of when materials were purchased or contracts were signed.
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What Pennsylvania Homeowners Can Still Claim in 2026 for Energy Savings
The federal tax credit may be gone, but several programs continue to offer meaningful savings to homeowners in northeastern Pennsylvania for insulation and air sealing.
PPL Electric Utility Rebates
PPL Electric, which serves approximately 1.4 million customers across central and eastern Pennsylvania, including much of NEPA, offers rebates on insulation and air sealing through its residential energy efficiency program under Pennsylvania’s Act 129.
Under the Act 129 Phase V extension, several rebates were actually increased to help homeowners budget for necessary projects.
- Insulation rebate: Up to $575 for qualifying attic, basement wall, rim joist, and exterior wall insulation improvements.
- Air sealing rebate: Up to $165 for professional air sealing.
- Comprehensive bonus for multiple upgrades: Bonus of up to $350 when you combine insulation with other qualifying upgrades in the same project (additional bonuses may apply for income-qualified customers).
Applications must be submitted within 180 days of installation. Verify current amounts and eligibility requirements at pplelectricsavings.com or through a participating contractor, as program terms and funding availability are subject to change.
UGI Utilities Save Smart Rebates
UGI serves natural gas customers across NEPA and other parts of Pennsylvania through its gas division, and electric customers in parts of Luzerne and Wyoming counties through its smaller electric division.
UGI’s Save Smart program provides rebates for qualifying insulation and air sealing improvements for gas customers.
- Insulation and air-sealing rebate: 25% of the total project cost, up to $2,500.
- Home Energy Evaluation: $50 diagnostic evaluation that provides improvement recommendations and rebate estimates before any work begins.
Work must be completed by a UGI Save Smart participating contractor, and applications must be postmarked within 90 days of installation.
Check ugi.com/rebates-for-home for current program status and contractor list. Income-qualified UGI customers may access additional support through UGI’s Low Income Usage Reduction Program.
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Pennsylvania Weatherization Assistance Program (WAP)
Pennsylvania’s Weatherization Assistance Program is a federally funded initiative that provides free insulation, air sealing, and energy-efficiency improvements to income-qualifying households.
Unlike a rebate or credit, WAP covers the full cost of qualifying work with no upfront payment required by the homeowner.
Here is some important about eligibility and potential coverage:
- Income limit: Household income at or below 200% of the federal poverty level. As of January 13, 2026: $31,920 for a single person, $66,000 for a family of four.
- Priority groups: Elderly residents, people with disabilities, families with children under 18, and high energy users receive priority.
- What it covers: Energy audit, air sealing, insulation (attic, walls, crawl space), and heating system improvements as determined by the auditor.
- How to apply: Contact your county weatherization agency or call 1-866-466-3972. Renters are eligible with landlord approval.
There is no cost to apply. Households that previously received WAP assistance may reapply after 15 years.
Penn Energy Savers (PA HEAR Program): Allocated but Not Yet Launched
As of July 2026, Pennsylvania’s Penn Energy Savers program is planned for disbursement but has not launched.
Pennsylvania was allocated $258.9 million in federal IRA funds, with $129.2 million for the Home Electrification and Appliance Rebate (HEAR) program and $130 million for the Home Efficiency Rebates (HOMES) program.
When launched, Penn Energy Savers is expected to offer rebates for insulation, air sealing, heat pumps, and other energy-efficient improvements for households at or below 150% of Area Median Income.
Income-qualifying households below 80% AMI could receive rebates covering up to 100% of eligible project costs. The program cannot fund work completed before the application is approved.
2026 Insulation Incentive Comparison for NEPA Homeowners
| Program | Who Qualifies | What You Get | Deadline / Status |
| PPL Electric Rebate | PPL residential customers | Up to $500 insulation + $200 air sealing | Apply within 180 days of work completed |
| UGI Save Smart | UGI gas customers in PA | 25% of project cost, max $2,500 | Within 90 days of install; check ugi.com |
| PA Weatherization (WAP) | Income ≤ 200% federal poverty level | Free insulation + air sealing (no cost to homeowner) | Ongoing — contact county agency |
| Penn Energy Savers (HEAR) | Income ≤ 150% AMI; some benefits to 80-150% AMI | Up to 100% of eligible costs for lowest-income households | Not yet launched as of July 2026 |
| Section 25C Federal Credit | Any homeowner | EXPIRED — no longer available | Ended December 31, 2025 |
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How to Claim the 25C Tax Credit for a 2025 Insulation Project
If your home insulation or air sealing project was completed and placed in service by December 31, 2025, you can claim the Section 25C credit on your 2025 federal tax return.
This non-refundable credit covers 30% of qualifying material costs (such as fiberglass, spray foam, weatherstripping, and caulk) up to a maximum of $1,200.
It applies strictly to materials, excluding labor, and requires the product’s Manufacturer’s Product Identification Number found on the packaging or provided by your contractor.
To claim the credit, complete Part II of IRS Form 5695 and transfer the final amount to Schedule 3 of Form 1040. Since it is non-refundable, the credit can only reduce your tax liability to zero and cannot be carried forward.
While you do not need to submit receipts or Manufacturer’s Certification Statements with your return, you must retain these records in case of an IRS review.
The Biggest Long-Term Savings Come from Upgrading Insulation Itself
Properly installed insulation reduces energy bills every year for the life of the home.
The U.S. The Department of Energy estimates that air leakage accounts for up to 40% of a home’s heating and cooling energy loss.
For a Northeastern Pennsylvania home paying $2,000 per year on heating and cooling, addressing air leakage and insufficient insulation can reduce energy costs by $400 to $600 annually or more, depending on the R-value of your upgrades.
Unlike a tax credit that offsets a one-time project cost, the savings compound year after year.
A $4,000 insulation project that saves $500 per year pays for itself in 8 years and continues to save money for the next 30 to 40 years of the insulation’s service life.
How to Budget for Insulation Upgrades in Pennsylvania
Even without the federal 25C tax credit, proper budgeting and local incentives make upgrading your home’s insulation highly manageable.
Focus on these core strategies to maximize your savings and lower your upfront costs:
- Stack utility rebates: PPL customers can combine insulation and air sealing rebates with multiple-upgrade bonuses, while UGI customers can pair “Save Smart” rebates with energy audits.
- Start with an energy audit: Investing in a BPI-certified audit reveals exactly where your home loses energy and unlocks utility offsets—PPL covers up to $350 of the cost, while UGI offers a $50 evaluation.
- Utilize low-interest financing: Pennsylvania’s HEELP program offers 1% interest loans up to $10,000, and the KEEP program provides up to $25,000 at below-market rates to bridge any funding gaps.
- Focus on utility savings: Professional insulation and air sealing in NEPA can slash heating and cooling bills by 20% to 40%, allowing the project to pay for itself through lower monthly bills.
- Watch for new state programs: Income-qualified households should monitor pennenergysavers.com for the upcoming HEAR program launch, which will offer substantial new insulation assistance.
By taking advantage of these local programs, budgeting for insulation becomes incredibly affordable, delivering an immediate return on investment through permanently lower energy bills and a more comfortable home.
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FAQs
Is the insulation tax credit still available in 2026?
No. The Section 25C Energy Efficient Home Improvement Credit was terminated for property placed in service after December 31, 2025 by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. The IRS confirmed this in Fact Sheet 2025-05, published August 21, 2025. The credit is not available for insulation projects completed in 2026.
What replaced the 25C insulation tax credit for Pennsylvania homeowners?
No direct federal replacement exists for 2026 insulation projects. Pennsylvania homeowners can access PPL Electric rebates (up to $500 for electrically heated homes), UGI Save Smart rebates (25% of costs up to $2,500 for gas customers), and the PA Weatherization Assistance Program for income-qualifying households.
Can I still claim the 25C credit for a project I did in 2025?
Yes. If the project was completed and placed in service on or before December 31, 2025, claim the credit on your 2025 federal tax return using IRS Form 5695, Part II. Retain receipts for qualifying materials and the Manufacturer’s Product Identification Number for each product. The credit is 30% of qualifying material costs (not labor), maximum $1,200 combined with other eligible credits. Consult a tax professional for your specific situation.
How much can PPL Electric customers save on insulation?
Up to $500 for insulation in electrically heated homes, $200 for homes with non-electric heat, and up to $200 for professional air sealing. A tiered bonus of $250 to $500 is available for completing multiple qualifying upgrades together. Applications must be submitted within 180 days of installation or by June 15, 2026, whichever is earlier. Verify current amounts at pplelectricsavings.com or with a participating contractor.
Does insulation still make financial sense without the federal tax credit?
Yes. The DOE estimates air leakage accounts for up to 40% of a home’s heating and cooling energy loss. In NEPA’s cold winters, addressing these issues with insulation and air sealing yields real annual savings — typically 20% or more on heating and cooling for homes with significant current deficiencies. Those savings continue every year for the life of the insulation.
What is Pennsylvania’s Weatherization Assistance Program?
WAP is a federally funded program that provides free insulation, air sealing, and energy-efficiency improvements to income-qualifying Pennsylvania households. Income must be at or below 200% of the federal poverty level ($31,920 for a single person, $66,000 for a family of four, as of January 2026). Priority is given to elderly residents, people with disabilities, and families with young children. Apply through your county weatherization agency or call 1-866-466-3972. There is no cost to apply.
