To combat increasing energy expenses and embrace sustainability, many homeowners are trying new methods to maintain comfort levels while using less energy. 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 significant savings, as long as the homeowners choose eligible equipment and submit the right paperwork.
If you’re concerned the application process might be tedious, we can share something that will help! Marios Air Conditioning hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you’ll need to do.
Understanding the HVAC Tax Credits
These valuable tax credits for upgrading your home to be more energy-efficient 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 main intention of these credits is to mitigate costs associated with installation and renovation projects. Two of note are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But keep in mind, to earn any of the credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted during the same tax year your 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 energy-efficient home upgrades. This can be up to 30% of the total project’s cost. Keep in mind that in order to receive the maximum amount, it involves making different investments. For example, you’ll save up to $2,000 for a new, high-efficiency heat pump. This can be combined with the remaining $1,200 in credits for other eligible upgrades made within the tax year.
While heat pumps are a great use of the program, other HVAC upgrades like efficient furnaces and air conditioners also qualify. 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 amounts to roughly 30% savings on a variety 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 key details of this tax credit include the requirement that installation must occur 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.
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 can guide you 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:
- Heat pump water heaters
- Electrical panel upgrades
- Upgraded electrical wiring
- Insulation, air sealing and ventilation enhancements
- High-efficiency electric stoves, cooktops, ranges or 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 chosen products meet the required 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 these reminders:
- Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
- Install new high efficiency 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.
Marios Air Conditioning Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Marios Air Conditioning for help with home energy audits and new installation projects. Our experienced installers can deliver whatever you need for home energy efficiency upgrades.