To combat increasing energy expenses and embrace sustainability, many homeowners are looking for ways to enjoy the same standards of comfort while reducing utility bills. As part of 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, as long as the homeowners use eligible equipment and submit the right paperwork.
If you’re concerned the application process might be tedious, we’re offering to help! Tri City Fuel & Heating hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s what you should know.
Understanding the HVAC Tax Credits
These valuable tax credits for boosting your home’s energy efficiency 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 primary goal of these credits is to help pay for high efficiency HVAC equipment and other projects. Two of note are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
Don’t forget, to be eligible for tax credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted within the same tax year any 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 every year for making your home more energy-efficient. This amounts to 30% of the total project’s cost. It's important to note in order to get back the maximum amount, it means making severel investments. For example, you’ll save up to $2,000 for high efficiency heat pump systems. 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, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You’ll need to confirm that your choice’s energy efficiency rating is high enough for eligibility.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit provides 30% savings on a number of other residential clean energy equipment upgrades. Eligibility is only extended 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 key details of this 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 spread out costs and keep them more manageable.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the biggest portions of your monthly energy costs, 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:
- Heat pump water heaters
- Modern electrical panel improvements
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Heat pump clothes dryers
- Water boilers
Just like with installing one or more HVAC systems, you’ll need to confirm that your chosen products meet the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
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. Maximize your HVAC tax credits with these reminders:
- Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
- 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.
Tri City Fuel & Heating Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Tri City Fuel & Heating for help with home energy audits and new installation projects. Our seasoned installers know how to provide all you need for a more energy-efficient home.
