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 significant savings, as long as the homeowners choose eligible equipment and submit the appropriate form.
If you’re worried about a long, complicated process, we’re offering to help! TopTec 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 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 main intention 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.
Don’t forget, in order to be eligible for tax credits, you’ll have to fill out IRS Form 5695. Additionally, this form has to be submitted within the same tax year the upgrades were installed, not purchased.
Maximizing Savings with the Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 every year for installing higher efficiency home upgrades. This equals 30% of the total project’s cost. Keep in mind that in order to be eligible for the maximum amount, it means making severel investments. For example, you’ll receive 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 installation projects are a popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You should confirm the make and model’s energy efficiency rating is sufficient to qualify.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a wide range of 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 instead designed around renewable energy sources like solar and wind energy.
Some specific items in this tax credit include the requirement that installation must occur between 2022 and 2032. But at the same time, homeowners can carry forward excess credit to offset future tax obligations. This is a great way to soften the entry into investing in clean energy.
What Else Is Eligible for These 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 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
- Electrical panel upgrades
- New electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Heat pump clothes dryers
- High-efficiency water boilers
Just like with installing one or more HVAC systems, you’ll need to confirm that your preferred make and model features the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While all the listed upgrades can boost home energy efficiency, a little planning will ensure more long-term benefits. Maximize your HVAC tax credits with the following three tips:
- 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.
- 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.
TopTec Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like TopTec for help with home energy audits and new installation projects. Our helpful installers will deliver everything you need for home energy efficiency upgrades.