The small but mighty federal tax credit that supports 240,000 jobs nationwide
A new Rewiring America analysis shows how the Energy Efficient Home Improvement Tax Credit drives consumer spending critical to supporting domestic jobs.
When it comes to delivering savings to Americans while bolstering domestic jobs, the federal Energy Efficient Home Improvement Tax Credit (also known as the 25C tax credit) punches well above its weight.
The 25C tax credit helps Americans invest in energy-efficient insulation, doors, windows, water heaters, and heating/cooling equipment — upgrades that can collectively cut energy bills by enough1 to wipe out the 30 percent surge in home energy bills since 2020.2 This incentive is broadly popular: more than 2.3 million homeowners used 25C in 2023, receiving an average of $880 in tax relief.3
But household savings aren’t the only benefit: as Congress begins work on a tax package, a new analysis by Rewiring America has found that every dollar Americans receive in tax savings through 25C supports ten dollars in consumer demand for efficient appliances and homes. In turn, that consumer demand supports some 240,000 domestic jobs, specifically:
37,000 domestic manufacturing jobs, such as insulation and heating and cooling equipment manufacturing
21,000 domestic distribution jobs, such as truck transportation and wholesale and retail distribution jobs
41,000 local installation jobs, such as residential HVAC and contract and electrical workers who install insulation, electrical panel upgrades, heat pump water heaters, heat pumps, and conventional water heaters and heating systems
143,000 jobs supporting the above sectors, including local small businesses
This analysis (methodology here) examines an overlooked element of consumer-facing incentives like 25C and demonstrates that manufacturing tax credits are far from the only piece of the jobs equation.
“The equipment manufacturing jobs only exist if people are buying the products, so we can’t overlook the demand side of the equation,” said David Friedman, Rewiring America senior director, federal policy. “These tax credits support consumer spending and in turn support the jobs of truck drivers hauling the equipment, the people working in retail stores selling it, and the people in your community installing it.”
Indeed, the 25C tax credit serves as a powerful marketing tool for energy efficiency contractors to drive business and expand their operations. That’s why more than 1,000 contractors from all 50 states wrote to Congress in support of preserving the 25C tax credit, stating: “our workforce is deeply rooted in communities across every state, contributing to local economies while performing jobs that typically cannot be outsourced.”
The findings of the new analysis also square with the fact that consumer spending drives about 70 percent of the economy.
“Consumers are the engine of our economy. Households are the engine of the economy. 25C helps us rev up our engine,” Friedman added. “25C is the small but mighty economic powerhouse that delivers serious savings to Americans and supports 240,000 American jobs. What’s not to like?”
Energy savings modeled on single-family homeowners installing insulation, heat pumps, and heat pump water heaters.
Consumer Price Index for All Urban Consumers: Household Energy in U.S. City Average, Federal Reserve Bank of St. Louis, January 2025.
U.S. Department of Treasury, August 2024.