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 big savings, provided that homeowners select eligible equipment and submit the right paperwork.
If you’re trying to avoid a long process, we can share something that will help! Bain Heating & Air Conditioning hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s how to make it happen.
Understanding the HVAC Tax Credits
These valuable tax credits for boosting your home’s energy efficiency are just one intended use 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 mitigate costs associated with installation and renovation projects. The two we’ll cover are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
Don’t forget, 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 purchased.
Maximizing Savings with the Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 each year for making your home more energy-efficient. This amounts to 30% of the total project’s cost. Keep in mind that in order to receive the maximum amount, it means making severel 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 new heat pump systems are a key target for this incentive, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You should confirm that your choice’s energy efficiency rating is sufficient to qualify.
Exploring the 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 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 carry forward excess credit to offset future tax obligations. This is a great way to spread out costs and keep them more manageable.
What Else Is Eligible for These Tax Credits?
Because HVAC systems are one of the biggest expenses on your energy bill, 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:
- Heat pump water heaters
- Electrical panel upgrades
- New electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Efficient heat pump clothes drying solutions
- High-efficiency water boilers
Like the 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 boost home energy efficiency, some planning ahead will ensure they offer the most long-term benefits. Maximize your HVAC tax credits with the following 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.
- Don’t forget financing options from local service companies, which can help reduce costs even more.
Bain Heating & Air Conditioning Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Bain Heating & Air Conditioning for help with home energy audits and new installation projects. Our helpful installers can deliver whatever you need for home energy efficiency upgrades.
