Your Guide to Applying for HVAC Tax Credits in 2024 – Speedy Air Conditioning
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 Under the Inflation Reduction Act
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 federal income tax 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.
What are HVAC tax credits and how do they work?
HVAC tax credits are incentives provided by the government to encourage homeowners to invest in energy-efficient heating, ventilation, and air conditioning systems. These credits can significantly reduce the cost of purchasing and installing a new HVAC system, making it more affordable for homeowners to upgrade to energy-efficient models. By claiming these tax credits on your federal income tax return, you can offset a portion of the system’s cost, leading to substantial savings.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement credit, also known as the efficient 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. Energy property costs, such as installing ENERGY STAR-compliant doors and windows, can also qualify for the credit. You should be aware that in order to be eligible for the maximum amount, it means making several 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 for the maximum annual credit.
Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a number of other residential clean energy equipment upgrades. ENERGY STAR-certified products are among the energy-efficient products that qualify for the Residential Clean Energy Credit. 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.
Eligibility and Qualified Expenses
To be eligible for HVAC tax credits, homeowners must meet certain requirements and ensure that their system meets specific energy efficiency standards.
Who qualifies for HVAC tax credits?
Homeowners who install energy-efficient HVAC systems in their primary residence may be eligible for tax credits. The home must be located in the United States and be the homeowner’s main residence. If you use your home for business purposes, you may still qualify, but the credit will only apply to the portion of the system used for residential purposes.
Qualified expenses and credit amounts for energy-efficient home improvements
Qualified expenses for HVAC tax credits include the cost of the system itself, as well as labor costs for installation. The credit amount varies depending on the type of system installed and its energy efficiency. For instance, air source heat pumps and heat pump water heaters can earn you a credit of up to $2,000. Biomass stoves and boilers are also eligible for a credit of up to $2,000. Keep in mind that the total limit for an efficiency tax credit in one year is $3,200.
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 energy efficient home improvement can be achieved 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
These improvements can lead to significant energy savings and qualify as ‘qualified energy efficient improvements’ for tax credits.
Just like with installing one or more HVAC systems, you’ll need to verify that your chosen products meet the required energy efficiency ratings.
State and Local Incentives
In addition to federal tax credits, many states and local governments offer incentives for energy-efficient home improvements.
Additional incentives for energy-efficient home improvements
Beyond federal tax credits, some states offer rebates or additional tax credits for energy-efficient HVAC systems. Others provide incentives for home energy audits or various energy-efficient upgrades. It’s a good idea to check with your state and local government to see what incentives are available. Additionally, some utility companies offer rebates or incentives for energy-efficient HVAC systems, so be sure to check with your utility provider to explore all your options.
By taking advantage of these additional incentives, you can further reduce the cost of your energy-efficient home improvements and maximize your savings.
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. Planning and budgeting for multiple projects can help maximize federal tax savings.
- 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. There is no lifetime dollar limit for the credits, allowing homeowners to claim the maximum annual credit each year until 2032.
- 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 services like energy assessments or new installation. Homeowners can benefit from the heat pump tax credit when installing energy-efficient heat pumps. Our experienced installers will deliver everything you need for home energy efficiency upgrades.