To combat increasing energy expenses and embrace sustainability, 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 choose eligible equipment and submit the appropriate form.
If you’re trying to avoid a long process, we’re offering to help! Temperature Doctors Heating & Cooling hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you should know.
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. Energy costs affect everyone, so helping homeowners upgrade to higher efficiency utilities can benefit everyone. The primary goal of these credits is to help pay for high efficiency HVAC equipment and other projects. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But keep in mind, in order to apply for the credits, you’ll have to complete IRS Form 5695. Additionally, this form needs to be submitted for the same tax year any upgrades were installed, not bought.
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 installing higher efficiency home upgrades. This can be up to 30% of the total project’s cost. Keep in mind that in order to get back the maximum amount, it means making severel investments. For example, you’ll save up to $2,000 for high efficiency heat pump systems. This can be paired with an additional $1,200 in credits for more projects in the tax year.
While heat pumps are a great use of the program, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. It will help to confirm that your choice’s energy efficiency rating is high enough for eligibility.
Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a variety of residential clean energy equipment upgrades. 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 spread out costs and keep them more manageable.
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 incentivize 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
- Modern electrical panel improvements
- New electrical wiring
- Insulation, air sealing and ventilation enhancements
- 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 confirm that your chosen products meet the eligible energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While any one of those upgrades can boost home energy efficiency, a little planning will ensure the best chance at more long-term benefits. Get the most from your HVAC tax credits with the following three tips:
- Conduct a home energy audit to identify impactful upgrades. Trust experienced HVAC companies to pinpoint essential products and services.
- 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.
- Remember to consider financing plans offered by service providers.
Secure Your 2024 HVAC Credits with Help from Temperature Doctors Heating & Cooling
Partner with local HVAC professionals like Temperature Doctors Heating & Cooling for help with home energy audits and new installation projects. Our seasoned installers will deliver everything you need for home energy efficiency upgrades.