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. Included in the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer big savings, provided that homeowners choose qualifying equipment and submit the right paperwork.
If you’re concerned the application process might be tedious, we can share something that will help! Rescue Heating & Air 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.
How Do These Tax Credits Work?
These valuable tax credits for energy-efficient home improvements are just one goal 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 mitigate costs associated with installation and renovation projects. The two we’ll cover are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
But keep in mind, in order to earn any of the credits, you’ll have to complete IRS Form 5695. Additionally, this form needs to be submitted for the same tax year your upgrades were installed, not purchased.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 annually for installing higher efficiency home upgrades. This can be up 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 save 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 heat pumps are a key target for this incentive, 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.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a variety of residential clean energy equipment upgrades. Eligibility only applies to homeowners looking for new clean energy solutions for their home. 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 requiring the installation project to be finished 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.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the biggest expenses on your energy bill, 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:
- Heat pump water heaters
- Electrical panel upgrades
- New electrical wiring
- Insulation, air sealing and ventilation enhancements
- High-efficiency electric stoves, cooktops, ranges or ovens
- Efficient heat pump clothes drying solutions
- Water boilers
Like the HVAC systems, you’ll need to verify 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 the best chance at more long-term benefits. Maximize your HVAC tax credits with these three tips:
- 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.
Rescue Heating & Air Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Rescue Heating & Air for help with home energy audits and new installation projects. Our helpful installers know how to provide all you need for a more energy-efficient home.