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 upgrading to more efficient HVAC systems, such as air conditioners. These credits offer a big chunk of the installation costs, provided that homeowners work with qualifying equipment and submit the appropriate form.
If you’re trying to avoid a long process, we’re offering to help! Pure Comfort Heating and Air Conditioning hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s how.
How Do These Tax Credits Work?
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 primary goal of these credits is to mitigate costs associated with installation and renovation projects. Of particular importance are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
But keep in mind, to apply for the credits, you’ll need to fill out IRS Form 5695. Additionally, this form is submitted within the same tax year your upgrades were installed, not bought.
Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 annually for installing higher efficiency home upgrades. This equals 30% of the total project’s cost. You should be aware that in order to get back 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 combined with the remaining $1,200 in credits for other eligible upgrades made within the tax year.
While new heat pump systems are a key target for this incentive, 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 amounts to roughly 30% savings on a variety of residential clean energy equipment upgrades. Eligibility only applies to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit works primarily with utilities and HVAC systems, this credit is more about 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 make things a little easier when investing in renewables.
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
- Electrical panel upgrades
- New electrical wiring
- Insulation, air sealing and ventilation enhancements
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Heat pump clothes dryers
- High-efficiency water boilers
Just like with installing one or more HVAC systems, you’ll need to verify that your preferred make and model features the eligible energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
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 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 Pure Comfort Heating and Air Conditioning
Partner with local HVAC professionals like Pure Comfort Heating and Air Conditioning for eligible serves like energy assessments or new installation. Our experienced installers will deliver everything you need for a more energy-efficient home.