To avoid rising energy costs and work toward a more sustainable life, many homeowners are trying new methods to maintain comfort levels while using less energy. As part of the Inflation Reduction Act, federal tax credits are available for upgrading to more efficient HVAC systems, such as air conditioners. These credits offer big savings, as long as the homeowners choose qualifying equipment and submit the appropriate form.
If you’re worried about a long, complicated process, we’re offering to help! Assured Appliance & Heating & Air hopes this guide will give you what you need to secure 2024’s HVAC tax credits. Here’s what you should know.
How Do These Tax Credits Work?
These valuable tax credits for upgrading your home to be more energy-efficient are just one intended use of the recent Inflation Reduction Act. Energy costs affect everyone, so helping homeowners upgrade to higher efficiency utilities can benefit everyone. The key provision of these credits is to help pay for high efficiency HVAC equipment and other projects. The two we’ll cover are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
However, in order to be eligible for tax credits, you’ll need a completed IRS Form 5695. Additionally, this form needs to be submitted within the same tax year any upgrades were installed, not purchased.
Maximizing Savings with the Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 every year for installing higher efficiency home upgrades. This equals 30% of the total project’s cost. Keep in mind that in order to be eligible for the maximum amount, you’ll have to make several investments. For example, you’ll receive up to $2,000 for installing a higher efficiency heat pump. This can be combined with the remaining $1,200 in credits for other eligible upgrades made within the tax year.
While new heat pump installation projects are a key target for this incentive, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. It will help to confirm that your choice’s energy efficiency rating is high enough for eligibility.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a wide range of residential clean energy efficiency projects. Eligibility is restricted to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit focuses on utilities and HVAC systems, this credit is more about renewable energy sources like solar and wind energy.
Some key details of this tax credit include requiring the installation project to be finished between 2022 and 2032. But at the same time, homeowners can carry forward excess credit to offset future tax obligations. This is a great way to spread out costs and keep them more manageable.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the biggest expenses on your energy bill, these tax credits offer more access to the most energy-efficient options. But home energy efficiency can be improved in many other ways. Apart from the previously listed HVAC upgrades, {you could also choose|other eligible items include|you also have access to:
- Heat pump water heaters
- Modern electrical panel improvements
- New electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Heat pump clothes dryers
- High-efficiency water boilers
Just like with installing one or more HVAC systems, you’ll need to confirm that your preferred make and model features the eligible energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any one of those upgrades can improve your home’s energy efficiency, some planning ahead will ensure the best chance at more long-term benefits. Maximize your HVAC tax credits with these three tips:
- Conduct a home energy audit to identify impactful upgrades. Trust experienced HVAC companies to pinpoint essential products and services.
- Install new high efficiency windows and doors.
- Look into rebates for clean energy projects from utilities. Renewable sources like solar, wind, and geothermal contribute to community power grid sustainability.
- Don’t forget financing options from local service companies, which can help reduce costs even more.
Assured Appliance & Heating & Air Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Assured Appliance & Heating & Air for help with home energy audits and new installation projects. Our experienced installers can deliver whatever you need for a more energy-efficient home.
