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. As part of the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer big savings, as long as the homeowners use qualifying equipment and submit the appropriate form.
If you’re trying to avoid a long process, maybe we can help! Dearing's Service & Solutions hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. 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 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 primary goal 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.
However, in order 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.
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 equals 30% of the total project’s cost. You should be aware 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 installation projects 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.
Residential Clean Energy Credit
The Residential Clean Energy Credit provides 30% savings on a number of other residential clean energy equipment upgrades. Eligibility is restricted to homeowners seeking to update existing or newly constructed homes. 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 soften the entry into investing in clean energy.
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 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
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Efficient heat pump clothes drying solutions
- High-efficiency water boilers
Like the HVAC systems, you’ll need to verify that your preferred make and model features the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any of these upgrades can improve your home’s energy efficiency, some planning ahead will ensure they offer the most long-term benefits. Maximize your HVAC tax credits with these three tips:
- Conduct a home energy audit to identify impactful upgrades. Trust experienced HVAC companies to pinpoint essential products and services.
- 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.
Secure Your 2024 HVAC Credits with Help from Dearing's Service & Solutions
Partner with local HVAC professionals like Dearing's Service & Solutions for eligible serves like energy assessments or new installation. Our helpful installers will deliver everything you need for home energy efficiency upgrades.