To combat increasing energy expenses and embrace sustainability, many homeowners are looking for ways to enjoy the same standards of comfort while reducing utility bills. Included in 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 use qualifying equipment and submit the right paperwork.
If you’re worried about a long, complicated process, we’re offering to help! Ilten's hopes this guide will give you what you need to secure 2024’s HVAC tax credits. 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 small part of the recent Inflation Reduction Act. Energy costs affect everyone, so helping homeowners upgrade to higher efficiency utilities can benefit everyone. The key provision of these credits is to mitigate costs associated with installation and renovation projects. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But remember, to earn any of the credits, you’ll need to fill out IRS Form 5695. Additionally, this form is submitted during the same tax year any upgrades were installed, not purchased.
Maximizing Savings with the Energy Efficiency Home Improvement Credit
Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 every year for making your home more energy-efficient. 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 save 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 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 should confirm the make and model’s energy efficiency rating is sufficient to qualify.
Residential Clean Energy Credit
The Residential Clean Energy Credit provides 30% savings on a variety of residential clean energy equipment upgrades. Eligibility is only extended to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit highlights 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 the requirement that installation must occur 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 soften the entry into investing in clean energy.
Additional Qualifications for Energy Tax Credits
Because HVAC systems are one of the biggest expenses on your energy bill, these tax credits incentivize 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
- Efficient heat pump clothes drying solutions
- Water boilers
Just like with installing one or more 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 any one of those upgrades can enhance your home's energy performance, some planning ahead will ensure more long-term benefits. Get the most from your HVAC tax credits with the following three tips:
- Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
- Improve your home's thermal efficiency with better 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.
- Don’t forget financing options from local service companies, which can help reduce costs even more.
Secure Your 2024 HVAC Credits with Help from Ilten's
Partner with local HVAC professionals like Ilten's for eligible serves like energy assessments or new installation. Our helpful installers know how to provide all you need for home energy efficiency upgrades.