This is the place to start, says Karen Schneider, a spokeswoman for Energy Star. Along with sealing up leaks, insulation should be the first upgrade a homeowner considers. "Sometimes people buy highly rated energy-efficient windows and they complain about drafts. But it's not the window; it's the insulation. Especially if you live in an old house," says Schneider. "Insulation deteriorates over time. If your house is 50 years old and hasn't had anything done, you can bet you need insulation."
Insulation requirements vary by region but must meet 2009 standards set by the International Energy Conservation Code. The insulation must have a five-year life span or two-year warranty. Insulated siding does not qualify. Labor is not included, and the tax credit is capped at $1,500.