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. With help from the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer big savings, as long as the homeowners select 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 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 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 key provision 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, in order to apply for the credits, you’ll have to complete IRS Form 5695. Additionally, this form has to be submitted during the same tax year your 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 energy-efficient home upgrades. This equals 30% of the total project’s cost. You should be aware that in order to receive the maximum amount, you’ll have to make several investments. For example, you’ll get 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 great use of the program, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You’ll need to confirm the make and model’s energy efficiency rating is high enough for eligibility.

Residential Clean Energy Credit

The Residential Clean Energy Credit amounts to roughly 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 is more about renewable energy sources like solar and wind energy.

Some key details of this tax credit include requiring the installation project to be finished between 2022 and 2032. But at the same time, homeowners can use any excess credit to reduce taxes in future years. This is a great way to spread out costs and keep them more manageable.

Additional Qualifications for Energy 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
  • 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

Just like with installing one or more HVAC systems, you’ll need to confirm that your preferred make and model features the eligible energy efficiency ratings.

Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips

While any one of those upgrades can improve your home’s energy efficiency, some planning ahead will ensure they offer the most long-term benefits. Get the most from your HVAC tax credits with the following three tips:

  1. Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
  2. Improve your home's thermal efficiency with better windows and doors.
  3. Look into rebates for clean energy projects from utilities. Renewable sources like solar, wind, and geothermal contribute to community power grid sustainability.
  4. Don’t forget financing options from local service companies, which can help reduce costs even more.

Refrigeration Systems Ltd. Can Help You Secure HVAC Credits for 2024

Partner with local HVAC professionals like Refrigeration Systems Ltd. for eligible serves like energy assessments or new installation. Our experienced installers can deliver whatever you need for home energy efficiency upgrades.