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. As part of 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 use qualifying equipment and submit the appropriate form.
If you’re trying to avoid a long process, we can share something that will help! Verona HVAC hopes this guide will give you what you need to secure 2024’s HVAC tax credits. Here’s what you’ll need to do.
How Do These Tax Credits Work?
These valuable tax credits for boosting your home’s energy efficiency are just one intended use 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 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.
Don’t forget, to be eligible for tax credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted within the same tax year the 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 installing higher efficiency home upgrades. This amounts to 30% of the total project’s cost. It's important to note in order to be eligible for the maximum amount, it means making severel investments. For example, you’ll save 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 installation projects are a key target for this incentive, other HVAC upgrades like efficient furnaces and air conditioners also qualify. It will help to confirm the make and model’s energy efficiency rating is sufficient to qualify.
Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a number of other residential clean energy efficiency projects. Eligibility is restricted 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 instead designed around 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 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 expenses on your energy bill, 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
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- High-efficiency electric stoves, cooktops, ranges or ovens
- Heat pump clothes dryers
- High-efficiency water boilers
Like the HVAC systems, you’ll need to check 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 the best chance at 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. 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.
Verona HVAC Can Help You Secure HVAC Credits for 2024
Partner with local HVAC professionals like Verona HVAC for eligible serves like energy assessments or new installation. Our helpful installers know how to provide all you need for home energy efficiency upgrades.