Companies, organizations call for modernizing homeowner energy efficiency tax credit

More than 1,000 companies and organizations called on members of Congress to expand and modernize the 25C tax credit for homeowner energy efficiency improvements in a letter sent Monday.

Led by the Alliance to Save Energy, the letter was sent to leadership in the U.S. House and Senate. It was signed by a coalition that included some of the country’s foremost companies, small businesses, and environmental and consumer advocacy groups.

“As the Congressional debate on infrastructure continues, lawmakers would be hard-pressed to find a policy with as much potential to decarbonize the nation’s housing stock, increase energy affordability, and create jobs in every community as simply reforming this long out-of-date tax credit,” said Alliance President Paula Glover. “There is support across industries and across the aisle to drive demand for energy efficiency to meet our 21st-century energy goals – now we just have to get this done.”

Currently, the Sec. 25C residential credit offers homeowners a 10 percent tax credit up to $500 for purchases of energy-efficient equipment or upgrades. Energy efficiency advocates say the existing credit is too low to incentivize homeowners to buy energy efficient equipment or improvements. The letter calls for reforms to the tax credit, including increasing the credit to at least $1,500 without limitation on qualified property type, providing a long-term extension to the credit to provide market certainty, and eliminating the lifetime cap and replacing it with a new annual cap.

An analysis by the Department of Energy found that increasing the incentive for just five product categories under Sec. 25C would increase sales of high-efficiency products by 278 percent and generate $52 billion in consumer energy bill saving. Advocates say it would also create hundreds of thousands of jobs in manufacturing and installing energy-efficient products.

“We can put money back into the pockets of households while helping them make their homes more sustainable and resilient – all while driving economic activity and creating jobs,” said Glover. “Win-win-win is an understatement.”