SUMMARY The inversion of electromagnetic induction data to a conductivity profile is an ill-posed problem. Regularization improves the stability of the inversion and a smoothing constraint is typically used. However, the conductivity profiles are not always expected to be smooth. Here, we develop a new inversion scheme in which we transform the model to the wavelet space and impose a sparsity constraint. This sparsity constrained inversion scheme will minimize an objective function with a least-squares data misfit and a sparsity measure of the model in the wavelet domain. A model transform to the wavelet domain allows to investigate the temporal resolution (periodicities at different frequencies) and spatial resolution (location of the peaks) characteristics of the model, and penalizing small-scale coefficients effectively reduces the complexity of the model. The novel scale-dependent regularization term can be used to favour either blocky or smooth structures, as well as high-amplitude models in globally smooth structures in the inversion. Depending on the expected conductivity profile, a suitable wavelet basis function can be chosen. The scheme supports multiple types of regularization with the same algorithm and is thus flexible. Finally, we apply this new scheme on a frequency domain electromagnetic sounding data set, but the scheme could equally apply to any other 1-D geophysical method.