Expanded Polystyrene (EPS) geofoam compressible inclusions placed over buried pipes are effective in reducing the earth pressure due to positive arching action. However, practical guidance for design is sparse. In particular, there is a scarcity of studies considering the influence of soil type and EPS density, individually and in combination, on compressible inclusion performance and optimal dimensions. This paper presents a finite difference method-based (using FLAC software) study of the effects of soil type and EPS density on the pressure distribution around a buried pipe. Tentative recommendations are also provided for buried pipe design when using an EPS inclusion. Numerical analyses were performed for different combinations of three soil types and three EPS densities. The numerical results show that the effectiveness of the EPS compressible inclusion can be predicted with a reasonable degree of accuracy based on the relationship between the soil and EPS stiffnesses. An effective compressibility index is proposed as an indicator to predict reduction of overburden stress on the pipe based on the soil stiffness and the EPS panel compressibility.