To avoid rising energy costs and work toward a more sustainable life, many homeowners are trying new methods to maintain comfort levels while using less energy. Included in the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer big savings, as long as the homeowners choose eligible equipment and submit the right paperwork.
If you’re trying to avoid a long process, maybe we can help! Refrigeration Systems Ltd. hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how.
How Do These Tax Credits Work?
These valuable tax credits for upgrading your home to be more energy-efficient 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 key provision of these credits is to mitigate costs associated with installation and renovation projects. Two of note are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
But keep in mind, to be eligible for tax credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted during the same tax year the upgrades were installed, not bought.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 every year for installing higher efficiency home upgrades. This can be up to 30% of the total project’s cost. It's important to note in order to receive the maximum amount, it involves making different investments. For example, you’ll get 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 great use of the program, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You’ll need to confirm that your choice’s energy efficiency rating is sufficient to qualify.
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 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 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 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:
- Energy-saving heat pump water heating systems
- Modern electrical panel improvements
- Upgraded electrical wiring
- Insulation, air sealing and ventilation enhancements
- High-efficiency electric stoves, cooktops, ranges or ovens
- Heat pump clothes dryers
- Water boilers
Like the HVAC systems, you’ll need to check that your preferred make and model features the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While all the listed upgrades can improve your home’s energy efficiency, a little planning will ensure more long-term benefits. Maximize your HVAC tax credits with these three tips:
- Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
- 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.
Refrigeration Systems Ltd. Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Refrigeration Systems Ltd. for help with home energy audits and new installation projects. Our experienced installers will deliver everything you need for home energy efficiency upgrades.