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 work with eligible equipment and submit the right paperwork.
If you’re trying to avoid a long process, maybe we can help! Air Commander's Heating & Air Conditioning Co. hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how to make it happen.
How Do These Tax Credits Work?
These valuable tax credits for energy-efficient home improvements are just one portion 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 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 keep in mind, in order to apply for the credits, you’ll have to complete IRS Form 5695. Additionally, this form has to be submitted for the same tax year any upgrades were installed, not purchased.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 annually for installing higher efficiency home upgrades. This amounts to 30% of the total project’s cost. Keep in mind that in order to be eligible for the maximum amount, it means making severel investments. For example, you’ll get 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 systems 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 should 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 wide range of residential clean energy efficiency projects. Eligibility only applies 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 more about renewable energy sources like solar and wind energy.
Some key details of this tax credit include the requirement that installation must occur 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 soften the entry into investing in clean energy.
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 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
- Modern electrical panel improvements
- 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 boost home energy efficiency, a little planning will ensure the best chance at more long-term benefits. Maximize your HVAC tax credits with these three tips:
- Perform an energy audit to pinpoint valuable enhancements. Rely on professional HVAC assessments for crucial advice.
- Enhance your home's envelope by addressing inefficient 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.
Air Commander's Heating & Air Conditioning Co. Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Air Commander's Heating & Air Conditioning Co. for eligible serves like energy assessments or new installation. Our seasoned installers know how to provide all you need for home energy efficiency upgrades.