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. With help from the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer significant savings, as long as the homeowners use eligible equipment and submit the appropriate form.
If you’re concerned the application process might be tedious, we’re offering to help! Verona HVAC hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s what you should know.
How Do These Tax Credits Work?
These valuable tax credits for upgrading your home to be more energy-efficient are just one portion of the recent Inflation Reduction Act. Energy costs affect everyone, so helping homeowners upgrade to higher efficiency utilities can benefit everyone. The primary goal of these credits is to help pay for high efficiency HVAC equipment and other projects. Two of note are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
However, in order to be eligible for tax credits, you’ll have to fill out IRS Form 5695. Additionally, this form has to be submitted during the same tax year any 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 annually for installing higher efficiency 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 new heat pump systems are a popular option for the tax credit, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You’ll need to confirm the make and model’s energy efficiency rating is high enough for eligibility.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a variety of residential clean energy efficiency projects. Eligibility is restricted to homeowners seeking to update existing or newly constructed homes. 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 keep the excess credit to reduce future taxes. 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
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Heat pump clothes dryers
- 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.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any one of those upgrades can enhance your home's energy performance, a little planning will ensure they offer the most 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.
- 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.
- Remember to consider financing plans offered by service providers.
Verona HVAC Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Verona HVAC for help with home energy audits and new installation projects. Our seasoned installers know how to provide all you need for home energy efficiency upgrades.