To combat increasing energy expenses and embrace sustainability, many homeowners are trying new methods to maintain comfort levels while using less energy. Included in the Inflation Reduction Act, federal tax credits are available for upgrading to more efficient HVAC systems, such as air conditioners. These credits offer significant savings, provided that homeowners choose eligible equipment and submit the appropriate form.
If you’re worried about a long, complicated process, we’re offering to help! House of Heating Incorporated hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how.
Understanding the HVAC Tax Credits
These valuable tax credits for upgrading your home to be more energy-efficient are just one small part 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 reduce the cost of installing high efficiency upgrades. Two of note are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But remember, to earn any of the credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted during the same tax year your upgrades were installed, not purchased.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 every year for energy-efficient home upgrades. This amounts to 30% of the total project’s cost. It's important to note in order to receive the maximum amount, you’ll have to make several investments. For example, you’ll receive up to $2,000 for high efficiency heat pump systems. 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 popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You should confirm that your choice’s energy efficiency rating is sufficient to qualify.
Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a variety of residential clean energy efficiency projects. Eligibility is only extended to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit highlights utilities and HVAC systems, this credit targets renewable energy sources like solar and wind energy.
Some specific items in this tax credit include requiring the installation project to be finished between 2022 and 2032. But at the same time, homeowners can use any excess credit to reduce taxes in future years. This is a great way to soften the entry into investing in clean energy.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the biggest portions of your monthly energy costs, these tax credits offer more access to the most energy-efficient options. But home energy efficiency can be improved in lots of 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
- Electrical panel upgrades
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Efficient heat pump clothes drying solutions
- Water boilers
Like the HVAC systems, you’ll need to check that your preferred make and model features the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any of these upgrades can boost home energy efficiency, a little planning will ensure they offer the most long-term benefits. Maximize your HVAC tax credits with the following three tips:
- Perform an energy audit to pinpoint valuable enhancements. 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.
House of Heating Incorporated Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like House of Heating Incorporated for eligible serves like energy assessments or new installation. Our experienced installers know how to provide all you need for home energy efficiency upgrades.