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 energy-efficient home upgrades, especially HVAC systems like air conditioners. These credits offer big savings, as long as the homeowners select eligible equipment and submit the appropriate form.
If you’re concerned the application process might be tedious, maybe we can help! ACS Heating and Air Conditioning hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s what you’ll need to do.
Understanding the HVAC Tax Credits
These valuable tax credits for energy-efficient home improvements are just one goal 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 help pay for high efficiency HVAC equipment and other projects. Of particular importance are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
However, to apply for the credits, you’ll have to fill out 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 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 receive 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 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 should confirm the make and model’s energy efficiency rating is sufficient to qualify.
Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a wide range of residential clean energy efficiency projects. 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 targets renewable energy sources like solar and wind energy.
Some specific items in this 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 spread out costs and keep them more manageable.
What Else Is Eligible for These Tax Credits?
Because HVAC systems are one of the major reasons for high energy bills, 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:
- Energy-saving heat pump water heating systems
- Modern electrical panel improvements
- 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 preferred make and model features the eligible energy efficiency ratings.
Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips
While any of these upgrades can enhance your home's energy performance, some planning ahead will ensure more long-term benefits. Maximize your HVAC tax credits with the following three tips:
- Perform an energy audit to pinpoint valuable enhancements. Rely on professional HVAC assessments for crucial advice.
- Install new high efficiency 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.
- Remember to consider financing plans offered by service providers.
ACS Heating and Air Conditioning Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like ACS Heating and Air Conditioning for eligible serves like energy assessments or new installation. Our seasoned installers can deliver whatever you need for a more energy-efficient home.
