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 energy-efficient home upgrades, especially HVAC systems like 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, maybe we can help! Fire & Ice HVAC hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how.
Understanding the HVAC Tax Credits
These valuable tax credits for upgrading your home to be more energy-efficient are just one small part of the recent Inflation Reduction Act. Energy costs affect everyone, so helping homeowners upgrade to higher efficiency utilities can benefit everyone. The main intention of these credits is to reduce the cost of installing high efficiency upgrades. Two of note are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
But remember, in order to claim your credits, you’ll need a completed IRS Form 5695. Additionally, this form is submitted during the same tax year your upgrades were installed, not bought.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 every year for making your home more energy-efficient. This can be up to 30% of the total project’s cost. It's important to note in order to receive the maximum amount, you’ll have to make several investments. For example, you’ll receive 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 heat pumps are a great use of the program, other HVAC upgrades like efficient furnaces and air conditioners also qualify. It will help to confirm that your choice’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 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 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 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
- Efficient heat pump clothes drying solutions
- Water boilers
Just like with installing one or more HVAC systems, you’ll need to check that your chosen products meet the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any of these upgrades can improve your home’s energy efficiency, 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. Rely on professional HVAC assessments for crucial advice.
- Improve your home's thermal efficiency with better 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.
- Don’t forget financing options from local service companies, which can help reduce costs even more.
Fire & Ice HVAC Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Fire & Ice HVAC for help with home energy audits and new installation projects. Our experienced installers can deliver whatever you need for home energy efficiency upgrades.