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. With help from the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer significant savings, as long as the homeowners work with qualifying equipment and submit the right paperwork.
If you’re concerned the application process might be tedious, we’re offering to help! Speedy Air Conditioning hopes this guide will give you what you need to secure 2024’s HVAC tax credits. 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. With the higher cost of energy making an impact, helping more homeowners upgrade their equipment is always beneficial. The main intention of these credits is to reduce the cost of installing high efficiency upgrades. Of particular importance are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
But remember, in order to claim your credits, you’ll have to fill out IRS Form 5695. Additionally, this form has to be submitted for the same tax year the upgrades were installed, not bought.
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 equals 30% of the total project’s cost. You should be aware 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 a new, high-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 systems are a key target for this incentive, other HVAC upgrades like efficient furnaces and air conditioners also qualify. 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 number of other residential clean energy equipment upgrades. Eligibility only applies to homeowners seeking to update existing or newly constructed homes. 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 provisions of the tax credit include the requirement that installation must occur 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 soften the entry into investing in clean energy.
What Else Is Eligible for These 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 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
- 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
Just like with installing one or more HVAC systems, you’ll need to verify that your chosen products meet the required energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While any one of those upgrades can enhance your home's energy performance, a little planning will ensure the best chance at more long-term benefits. Get the most from your HVAC tax credits with these reminders:
- Conduct a home energy audit to identify impactful upgrades. Trust experienced HVAC companies to pinpoint essential products and services.
- 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.
Secure Your 2024 HVAC Credits with Help from Speedy Air Conditioning
Partner with local HVAC professionals like Speedy Air Conditioning for eligible serves like energy assessments or new installation. Our experienced installers will deliver everything you need for home energy efficiency upgrades.
