To avoid rising energy costs and work toward a more sustainable life, many homeowners are looking for ways to enjoy the same standards of comfort while reducing utility bills. With help from 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 work with eligible equipment and submit the right paperwork.
If you’re worried about a long, complicated process, we can share something that will help! Precision Mechanical hopes this guide will give you what you need to secure 2024’s HVAC tax credits. Here’s what you’ll need to do.
Understanding the HVAC Tax Credits
These valuable tax credits for boosting your home’s energy efficiency are just one portion 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 keep in mind, in order to be eligible for tax credits, you’ll have to complete IRS Form 5695. Additionally, this form is submitted during the same tax year any 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 energy-efficient home upgrades. This amounts to 30% of the total project’s cost. It's important to note in order to receive the maximum amount, it means making severel investments. For example, you’ll get up to $2,000 for installing a higher 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 installation projects are a popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. 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 offers 30% savings on a number of other residential clean energy efficiency projects. Eligibility is only extended to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit highlights utilities and HVAC systems, this credit targets 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 make things a little easier when investing in renewables.
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
- Electrical panel upgrades
- Upgraded electrical wiring
- Insulation, air sealing and ventilation enhancements
- 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 preferred make and model features the required energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While all the listed upgrades can enhance your home's energy performance, some planning ahead will ensure the best chance at more long-term benefits. Maximize your HVAC tax credits with these reminders:
- Perform an energy audit to pinpoint valuable enhancements. 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.
- Remember to consider financing plans offered by service providers.
Secure Your 2024 HVAC Credits with Help from Precision Mechanical
Partner with local HVAC professionals like Precision Mechanical for eligible serves like energy assessments or new installation. Our helpful installers will deliver everything you need for a more energy-efficient home.
