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 significant savings, provided that homeowners work with eligible equipment and submit the right paperwork.
If you’re trying to avoid a long process, we can share something that will help! Point Heating & Cooling hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you’ll need to do.
How Do These Tax Credits Work?
These valuable tax credits for boosting your home’s energy efficiency 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 primary goal of these credits is to help pay for high efficiency HVAC equipment and other projects. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But keep in mind, to be eligible for tax 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 purchased.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 each year for making your home more energy-efficient. This can be up to 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 paired with an additional $1,200 in credits for more projects in 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. It will help to confirm the make and model’s energy efficiency rating is high enough for eligibility.
Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a number of other residential clean energy efficiency projects. Eligibility only applies to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit focuses on utilities and HVAC systems, this credit is instead designed around renewable energy sources like solar and wind energy.
Some provisions of the 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 soften the entry into investing in clean energy.
Additional Qualifications for Energy 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 many 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
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Heat pump clothes dryers
- High-efficiency water boilers
Like the HVAC systems, you’ll need to confirm that your chosen products meet the eligible energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While any of these upgrades can enhance your home's energy performance, a little planning will ensure more long-term benefits. Get the most from your HVAC tax credits with these three tips:
- Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
- Enhance your home's envelope by addressing inefficient windows and doors.
- Explore potential rebates from utility companies for clean energy upgrades. 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 Point Heating & Cooling
Partner with local HVAC professionals like Point Heating & Cooling for eligible serves like energy assessments or new installation. Our experienced installers know how to provide all you need for a more energy-efficient home.