This article investigates the rebound effect in residential heating, using a sample of 563,000 households in the Netherlands. Using instrumental variable and fixed‐effects approaches, we address potential endogeneity concerns. The results show a rebound effect of 26.7% among homeowners, and 41.3% among tenants. We corroborate the findings through a quasiexperimental analysis, using a large retrofit subsidy program. We also document significant heterogeneity in the rebound effect, determined by household wealth and income, and the actual energy use intensity. The findings in this article confirm the important role of household behavior in determining the outcomes of energy efficiency improvement programs.