I 

116TH CONGRESS 

1ST SESSION H. R. 5166 

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 

NOVEMBER 19, 2019 

Ms. SA ́NCHEZ (for herself, Mr. SUOZZI, Mr. DANNY K. DAVIS of Illinois, Ms. 

DELBENE, Mr. PANETTA, Mr. BRENDAN F. BOYLE of Pennsylvania, Ms. 

MOORE, and Mr. BLUMENAUER) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Mechanical Insulation 

5 Installation Incentive Act of 2019’’. 

6 SEC. 2. LABOR COSTS OF INSTALLING MECHANICAL INSU7 LATION PROPERTY. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45T. LABOR COSTS OF INSTALLING MECHANICAL IN4 SULATION PROPERTY. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

6 mechanical insulation labor costs credit determined under 

7 this section for any taxable year is an amount equal to 

8 10 percent of the mechanical insulation labor costs paid 

9 or incurred by the taxpayer during such taxable year. 

10 ‘‘(b) MECHANICAL INSULATION LABOR COSTS.—For 

11 purposes of this section— 

12 ‘‘(1) IN GENERAL.—The term ‘mechanical insu13 lation labor costs’ means the labor cost of installing 

14 mechanical insulation property with respect to a me15 chanical system referred to in paragraph (2)(A) 

16 which was originally placed in service not less than 

17 1 year before the date on which such mechanical in18 sulation property is installed. 

19 ‘‘(2) MECHANICAL INSULATION PROPERTY.— 

20 The term ‘mechanical insulation property’ means in21 sulation materials, and facings and accessory prod22 ucts installed in connection to such insulation mate23 rials— 

24 ‘‘(A) placed in service in connection with a 

25 mechanical system which— 


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1 ‘‘(i) is located in the United States, 

2 and 

3 ‘‘(ii) is of a character subject to an al4 lowance for depreciation, and 

5 ‘‘(B) which result in a reduction in energy 

6 loss from the mechanical system which is great7 er than the expected reduction from the instal8 lation of insulation materials which meet the 

9 minimum requirements of Reference Standard 

10 90.1 (as defined in section 179D(c)(2)). 

11 ‘‘(c) TERMINATION.—This section shall not apply to 

12 mechanical insulation labor costs paid or incurred after 

13 December 31, 2024.’’. 

14 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI15 NESS CREDIT.—Section 38(b) of such Code is amended 

16 by striking ‘‘plus’’ at the end of paragraph (31), by strik17 ing the period at the end of paragraph (32) and inserting 

18 ‘‘, plus’’, and by adding at the end the following new para19 graph: 

20 ‘‘(33) the mechanical insulation labor costs 

21 credit determined under section 45T(a).’’. 

22 (c) CONFORMING AMENDMENTS.— 

23 (1) Section 280C of such Code is amended by 

24 adding at the end the following new subsection: 


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1 ‘‘(i) MECHANICAL INSULATION LABOR COSTS CRED2 IT.— 

3 ‘‘(1) IN GENERAL.—No deduction shall be al4 lowed for that portion of the mechanical insulation 

5 labor costs (as defined in section 45T(b)) otherwise 

6 allowable as deduction for the taxable year which is 

7 equal to the amount of the credit determined for 

8 such taxable year under section 45T(a). 

9 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP10 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 

11 ‘‘(A) the amount of the credit determined 

12 for the taxable year under section 45T(a), ex13 ceeds 

14 ‘‘(B) the amount of allowable as a deduc15 tion for such taxable year for mechanical insu16 lation labor costs (determined without regard to 

17 paragraph (1)), 

18 the amount chargeable to capital account for the 

19 taxable year for such costs shall be reduced by the 

20 amount of such excess.’’. 

21 (2) The table of sections for subpart D of part 

22 IV of subchapter A of chapter 1 of such Code is 

23 amended by adding at the end the following new 

24 item: 

‘‘Sec. 45T. Labor costs of installing mechanical insulation property.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to amounts paid or incurred after 

3 December 31, 2019, in taxable years ending after such 

4 date. 

Æ 


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