WASHINGTON – In a letter sent Monday to tax leadership in the U.S. House and Senate, 1,063 companies and organizations called on Congress to expand and modernize the 25C tax credit for homeowner energy efficiency improvements. The letter was led by the Alliance to Save Energy, and was signed by a diverse coalition including some of the nation’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nation’s housing stock, increase energy affordability, and create jobs in every community as simply reforming this long out-of-date tax credit,” said Alliance President Paula Glover.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 21^st century energy goals – now we just have to get this done.”

“We know from experience that a properly designed incentive is the key to motivating homeowners to invest in upgrades to home energy performance. When they make that investment, they love what it delivers – lower utility bills, increased comfort, and a healthier home,” said Terry Burnham, President of Insul Pro Plus, an insulation contractor based in Pelahatchie, Mississippi and one of the letter's signatories.

The Sec. 25C residential credit currently offers homeowners a 10% tax credit up to $500 with a lifetime cap for the purchase of energy-efficient equipment or upgrades. While intended to drive demand for efficiency, the existing credit is simply too low to incentivize many homeowners to buy efficient. The letter calls for a number of reforms to bring this policy to its potential, including eliminating the lifetime cap and establishing an annual cap, increasing its value to at least $1,500 without limitation on the qualified property type, and providing a long-term extension to provide market certainty. A full copy of the letter is available here.

The benefits of reforming this credit have already been proven. A similar expansion under the American Recovery and Reinvestment Act increased the value of credits claim by a factor of five, and Department of Energy analysis found that increasing the incentive for just five product categories under Sec. 25C would boost sales of high-efficiency products by 278% while generating $52 billion in consumer energy bill savings. Modernizing the credit could also create hundreds of thousands of jobs in manufacturing and installing these 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.”

About the Alliance to Save Energy

Founded in 1977, the Alliance to Save Energy is a nonprofit, bipartisan alliance of business, government, environmental and consumer leaders working to expand the economy while using less energy. Our mission is to promote energy productivity worldwide – including through energy efficiency – to achieve a stronger economy, a cleaner environment and greater energy security, affordability, and reliability.

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