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. 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 a big chunk of the installation costs, provided that homeowners use qualifying equipment and submit the right paperwork.
If you’re trying to avoid a long process, we can share something that will help! Indoor Comfort Systems HVAC hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s what you’ll need to do.
How Do These Tax Credits Work?
These valuable tax credits for energy-efficient home improvements are just one intended use of the recent Inflation Reduction Act. With the higher cost of energy making an impact, helping more homeowners upgrade their equipment is always beneficial. The primary goal of these credits is to mitigate costs associated with installation and renovation projects. Two of note are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
However, to earn any of the credits, you’ll have to complete IRS Form 5695. Additionally, this form needs to be submitted for the same tax year any upgrades were installed, not bought.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 each year for installing higher efficiency home upgrades. This amounts to 30% of the total project’s cost. Keep in mind that in order to receive the maximum amount, it involves making different 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 great use of the program, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You’ll need to confirm that your choice’s energy efficiency rating is sufficient to qualify.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit provides 30% savings on a variety of residential clean energy efficiency projects. Eligibility is only extended to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit works primarily with utilities and HVAC systems, this credit is instead designed around renewable energy sources like solar and wind energy.
Some provisions of the tax credit include the requirement that installation must occur 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 spread out costs and keep them more manageable.
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 many other ways. Apart from the previously listed HVAC upgrades, {you could also choose|other eligible items include|you also have access to:
- Energy-saving heat pump water heating systems
- Electrical panel upgrades
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Efficient heat pump clothes drying solutions
- High-efficiency water boilers
Like the HVAC systems, you’ll need to check that your chosen products meet the required energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While any of these upgrades can boost home energy efficiency, a little planning will ensure they offer the most long-term benefits. Get the most from your HVAC tax credits with the following three tips:
- Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
- Improve your home's thermal efficiency with better 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.
Secure Your 2024 HVAC Credits with Help from Indoor Comfort Systems HVAC
Partner with local HVAC professionals like Indoor Comfort Systems HVAC for eligible serves like energy assessments or new installation. Our helpful installers can deliver whatever you need for a more energy-efficient home.