Mechanical Insulation Installation Incentive Act of 2025

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2463 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 2463

To amend the Internal Revenue Code of 1986 to provide a credit for the
       labor costs of installing mechanical insulation property.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 27, 2025

Ms. Sanchez (for herself and Mr. Fitzpatrick) introduced the following
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

To amend the Internal Revenue Code of 1986 to provide a credit for the
       labor costs of installing mechanical insulation property.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mechanical Insulation Installation
Incentive Act of 2025''.

SEC. 2. LABOR COSTS OF INSTALLING MECHANICAL INSULATION PROPERTY.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:

``SEC. 45BB. LABOR COSTS OF INSTALLING MECHANICAL INSULATION PROPERTY.

    ``(a) In General.--For purposes of section 38, the mechanical
insulation labor costs credit determined under this section for any
taxable year is an amount equal to 10 percent of the mechanical
insulation labor costs paid or incurred by the taxpayer during such
taxable year.
    ``(b) Mechanical Insulation Labor Costs.--For purposes of this
section--
            ``(1) In general.--The term `mechanical insulation labor
        costs' means the labor cost of installing mechanical insulation
        property (including property assembled offsite) with respect to
        a mechanical system referred to in paragraph (2)(A) which was
        originally placed in service not less than 1 year before the
        date on which such mechanical insulation property is installed.
            ``(2) Mechanical insulation property.--The term `mechanical
        insulation property' means insulation materials, and facings
        and accessory products installed in connection to such
        insulation materials--
                    ``(A) placed in service in connection with a
                mechanical system which--
                            ``(i) is located in the United States, and
                            ``(ii) is of a character subject to an
                        allowance for depreciation,
                    ``(B) in a manner that meets or complies with the
                minimum requirements of Reference Standard 90.1 (as
                defined in section 179D(c)(2)), and
                    ``(C) the installation of which results in a
                reduction in energy loss from such mechanical system.
    ``(c) Termination.--This section shall not apply to mechanical
insulation labor costs paid or incurred after December 31, 2028.''.
    (b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code is amended by striking ``plus'' at the end of
paragraph (40), by striking the period at the end of paragraph (41) and
inserting ``, plus'', and by adding at the end the following new
paragraph:
            ``(42) the mechanical insulation labor costs credit
        determined under section 45BB(a).''.
    (c) Conforming Amendments.--
            (1) Section 280C of such Code is amended by adding at the
        end the following new subsection:
    ``(i) Mechanical Insulation Labor Costs Credit.--
            ``(1) In general.--No deduction shall be allowed for that
        portion of the mechanical insulation labor costs (as defined in
        section 45BB(b)) otherwise allowable as deduction for the
        taxable year which is equal to the amount of the credit
        determined for such taxable year under section 45BB(a).
            ``(2) Similar rule where taxpayer capitalizes rather than
        deducts expenses.--If--
                    ``(A) the amount of the credit determined for the
                taxable year under section 45BB(a), exceeds
                    ``(B) the amount of allowable as a deduction for
                such taxable year for mechanical insulation labor costs
                (determined without regard to paragraph (1)),
        the amount chargeable to capital account for the taxable year
        for such costs shall be reduced by the amount of such
        excess.''.
            (2) The table of sections for subpart D of part IV of
        subchapter A of chapter 1 of such Code is amended by adding at
        the end the following new item:

``Sec. 45BB. Labor costs of installing mechanical insulation
                            property.''.
    (d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after December 31, 2025, in taxable
years ending after such date.
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