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 high efficiency HVAC equipment. These credits offer a big chunk of the installation costs, as long as the homeowners use eligible equipment and submit the appropriate form.
If you’re worried about a long, complicated process, we’re offering to help! Air Service Co. 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.
Understanding the HVAC Tax Credits
These valuable tax credits for energy-efficient home improvements are just one goal 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 Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
Don’t forget, to earn any of the credits, you’ll need a completed IRS Form 5695. Additionally, this form is submitted for the same tax year any upgrades were installed, not bought.
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 annually for installing higher efficiency home upgrades. This amounts to 30% of the total project’s cost. You should be aware that in order to get back the maximum amount, it means making severel 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 heat pumps 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 the make and model’s energy efficiency rating is sufficient to qualify.
Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a variety of residential clean energy equipment upgrades. Eligibility is only extended to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit focuses on 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 keep the excess credit to reduce future taxes. This is a great way to spread out costs and keep them more manageable.
What Else Is Eligible for These Tax Credits?
Because HVAC systems are one of the biggest portions of your monthly energy costs, these tax credits incentivize 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
- Electrical panel upgrades
- New electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Efficient heat pump clothes drying solutions
- High-efficiency water boilers
Like the HVAC systems, you’ll need to confirm that your chosen products meet the eligible energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While all the listed upgrades can enhance your home's energy performance, a little planning will ensure 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.
- 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 Air Service Co.
Partner with local HVAC professionals like Air Service Co. for eligible serves like energy assessments or new installation. Our experienced installers will deliver everything you need for home energy efficiency upgrades.
