The tax credits also drive consumer spending that supports around 460,000 jobs, per the nonprofit. That figure includes direct jobs to install home-energy equipment, indirect jobs to manufacture and transport it, and induced local jobs spurred by worker spending, like at the restaurants where they stop for lunch.
The findings come as the Trump administration attacks popular energy-efficiency programs that have helped households save billions of dollars and reduced the use of planet-warming fossil fuels. The administration’s moves to dismantle programs like Energy Star have met industry opposition — as has Congress’ plan to eliminate the energy-efficiency tax credits.
Members of Air Conditioning Contractors of America are also throwing their support behind the tax incentive, which is “simple, fuel neutral, and available nationwide” — in contrast to the Inflation Reduction Act’s more complex home energy rebates, Sean Robertson, the association’s vice president of membership, advocacy, and events, recently told Air Conditioning, Heating & Refrigeration News. The industry is encouraging contractors and their customers to reach out to their congressional representatives to defend the tax credits.
The sudden disappearance of such incentives can wreak havoc on an industry.
In 2017, geothermal heat pumps got cut from eligibility for the 25D tax credit. As a result, sales dropped by 50% that year, Ryan Dougherty, president of the nonprofit trade association Geothermal Exchange Organization, told the HVAC industry news outlet. “We cannot let that happen again.”
The tax credits also bolster the grid because in boosting efficiency, they reduce home energy use on the hottest and coldest days of the year. Not only is that good for reliability, but it also creates new economic opportunities by making room on the grid that could facilitate a rapid build-out of AI data centers and onshore manufacturing, according to Rewiring America.
Seven states would see annual peak demand fall by more than 1 gigawatt if all single-family, owner-occupied households were to install heat pumps and the weatherization upgrades incentivized by 25C, the nonprofit found. Texas alone could save nearly 7 gigawatts, equivalent to the amount needed to power more than 170 data centers.
The proposed federal budget is still evolving, and some Republicans — including a potentially majority-busting four senators of the chamber’s 53 — have signed letters in support of safeguarding Inflation Reduction Act energy tax credits to at least some degree. In a March letter to the chair of the House Ways and Means Committee, 21 House Republicans emphasized “the importance of prioritizing energy affordability for American families.” Others, however, have said cuts to the Biden-era law’s tax credits don’t go far enough.
Republican House Speaker Mike Johnson has said he aims to pass the budget legislation and send it to the Senate by May 26. Republican factions are sparring over Medicaid cuts, the cap on a deduction that constituents can take for state and local taxes, and whether to supersize the deficit — and sparing comparatively little attention for the consequences of scrapping the two home-energy tax credits.
