1. Short title This Act may be cited as the Mechanical Insulation Installation Incentive Act of 2023 . 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: 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