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. With help from 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, as long as the homeowners use qualifying equipment and submit the appropriate form.
If you’re concerned the application process might be tedious, maybe we can help! Miller Climate Control LLC hopes this guide will give you what you need to secure 2024’s HVAC tax credits. Here’s what you should know.
How Do These Tax Credits Work?
These valuable tax credits for energy-efficient home improvements are just one intended use 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 help pay for high efficiency HVAC equipment and other projects. Two of note are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.
But keep in mind, in order 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 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 each year 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, it involves making different investments. For example, you’ll receive 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 installation projects 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 high enough for eligibility.
Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a wide range of residential clean energy equipment upgrades. Eligibility only applies to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit highlights 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 use any excess credit to reduce taxes in future years. 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 biggest expenses on your energy bill, 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:
- Energy-saving heat pump water heating systems
- Modern electrical panel improvements
- 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
Like the HVAC systems, you’ll need to check that your chosen products meet the required energy efficiency ratings.
Three Tips for Making the Most of 2024 HVAC Tax Credits
While any of these upgrades can improve your home’s energy efficiency, a little planning will ensure more long-term benefits. Maximize your HVAC tax credits with these three tips:
- Perform an energy audit to pinpoint valuable enhancements. Rely on professional HVAC assessments for crucial advice.
- 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 Miller Climate Control LLC
Partner with local HVAC professionals like Miller Climate Control LLC for help with home energy audits and new installation projects. Our experienced installers know how to provide all you need for a more energy-efficient home.
