Designed to encourage Americans to invest in energy-efficient doors, windows, water heaters, HVAC systems and insulation, the federal Energy Efficient Home Improvement Tax Credit (also known as the 25C tax credit) has the added benefit of supporting domestic jobs, according to a March 2025 report from Rewiring America.

More than 2.3 million homeowners took advantage of the 25C tax credit in 2023, claiming a total of $2 billion in credits, for an average tax savings of $880, according to the U.S. Treasury. The federal reserve bank of St. Louis estimates that those qualifying upgrades cut energy bills enough to combat the 30% increase in home energy bills since 2020.

Rewiring America’s analysis indicates that for every dollar Americans generate in tax savings through 25C, $10 in consumer demand for efficient appliances and homes results. This, in turn, supports 240,000 U.S. jobs, such as: 

• 41,000 local installation jobs for residential HVAC and electrical workers who install insulation, electrical panel upgrades, heat pump water heaters, heat pumps and conventional water heaters and heating systems
• 37,000 manufacturing jobs, including insulation and heating and cooling equipment manufacturing 
• 21,000 distribution jobs, including truck transportation and wholesale and retail distribution jobs
• 143,000 jobs supporting all these sectors, including local small businesses
  

The analysis found that consumer spending drives about 70% of the economy. 

“Consumers are the engine of our economy. Households are the engine of the economy. 25C helps us rev up our engine,” said David Friedman, Rewiring America’s senior director of federal policy.

Consumer purchases make way for more job opportunities. “The equipment manufacturing jobs only exist if people are buying the products, so we can’t overlook the demand side of the equation,” Friedman said. “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.” 

The report also notes the value of the 25C tax credit to contractors as a marketing tool to help them drive business and expand their operations.