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, as long as the homeowners select eligible equipment and submit the right paperwork.
If you’re concerned the application process might be tedious, we’re offering to help! Taylor's Heating & Air Conditioning hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how.
How Do These Tax Credits Work?
These valuable tax credits for energy-efficient home improvements are just one small part 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 key provision of these credits is to reduce the cost of installing high efficiency upgrades. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
However, to be eligible for tax credits, you’ll need to fill out IRS Form 5695. Additionally, this form needs to be submitted during the same tax year the 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 can be up to 30% of the total project’s cost. It's important to note in order to receive 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 paired with an additional $1,200 in credits for more projects in the tax year.
While heat pumps are a great use of the program, 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 provides 30% savings on a number of other residential clean energy equipment upgrades. Eligibility is restricted 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 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 make things a little easier when investing in renewables.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the major reasons for high energy bills, 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:
- Energy-saving heat pump water heating systems
- Modern electrical panel improvements
- New electrical wiring
- Insulation, air sealing and ventilation enhancements
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Heat pump clothes dryers
- Water boilers
Like the HVAC systems, you’ll need to verify that your preferred make and model features 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 they offer the most long-term benefits. Get the most from your HVAC tax credits with these reminders:
- Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
- Install new high efficiency 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.
- Remember to consider financing plans offered by service providers.
Secure Your 2024 HVAC Credits with Help from Taylor's Heating & Air Conditioning
Partner with local HVAC professionals like Taylor's Heating & Air Conditioning for help with home energy audits and new installation projects. Our helpful installers will deliver everything you need for a more energy-efficient home.