To combat increasing energy expenses and embrace sustainability, many homeowners are trying new methods to maintain comfort levels while using less energy. 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, provided that homeowners use eligible equipment and submit the appropriate form.
If you’re worried about a long, complicated process, maybe we can help! Western Mechanical, Inc. hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s how.
How Do These Tax Credits Work?
These valuable tax credits for boosting your home’s energy efficiency are just one goal 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 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.
Don’t forget, to apply for the credits, you’ll have to complete 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 every year for installing higher efficiency home upgrades. This amounts to 30% of the total project’s cost. Keep in mind that in order to receive 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 combined with the remaining $1,200 in credits for other eligible upgrades made within 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. It will help to confirm that your choice’s energy efficiency rating is high enough for eligibility.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit offers 30% savings on a number of other residential clean energy efficiency projects. Eligibility is only extended to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit works primarily with utilities and HVAC systems, this credit targets renewable energy sources like solar and wind energy.
Some provisions of the 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 offer more access 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
- Upgraded electrical wiring
- Enhancements to insulation, air sealing, and ventilation
- Energy-efficient cooking appliances like stoves, cooktops, and ovens
- Efficient heat pump clothes drying solutions
- Water boilers
Like the HVAC systems, you’ll need to verify 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 of these upgrades can boost home energy efficiency, a little planning will ensure they offer the most long-term benefits. Get the most from your HVAC tax credits with these reminders:
- 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.
- 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.
Secure Your 2024 HVAC Credits with Help from Western Mechanical, Inc.
Partner with local HVAC professionals like Western Mechanical, Inc. for eligible serves like energy assessments or new installation. Our experienced installers can deliver whatever you need for a more energy-efficient home.