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 energy-efficient home upgrades, especially HVAC systems like air conditioners. These credits offer big savings, as long as the homeowners select eligible equipment and submit the right paperwork.

If you’re worried about a long, complicated process, we’re offering to help! Diedrick's Heating and Air Conditioning hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s how to make it happen.

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. 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. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.

But keep in mind, in order to claim your credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted for the same tax year your 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 energy-efficient home upgrades. This amounts to 30% of the total project’s cost. You should be aware that in order to get back 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 great use of the program, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You should confirm the make and model’s energy efficiency rating is sufficient to qualify.

Exploring the Residential Clean Energy Credit

The Residential Clean Energy Credit provides 30% savings on a variety of residential clean energy efficiency projects. Eligibility is restricted to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit focuses on 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 carry forward excess credit to offset future tax obligations. 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 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
  • Modern electrical panel improvements
  • New electrical wiring
  • Insulation, air sealing and ventilation enhancements
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Heat pump clothes dryers
  • Water boilers

Like the HVAC systems, you’ll need to confirm that your chosen products meet the required energy efficiency ratings.

Three Tips for Making the Most of 2024 HVAC Tax Credits

While any one of those upgrades can boost home energy efficiency, some planning ahead will ensure the best chance at more long-term benefits. Maximize your HVAC tax credits with these reminders:

  1. Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
  2. Enhance your home's envelope by addressing inefficient windows and doors.
  3. Explore potential rebates from utility companies for clean energy upgrades. Renewable sources like solar, wind, and geothermal contribute to community power grid sustainability.
  4. Don’t forget financing options from local service companies, which can help reduce costs even more.

Secure Your 2024 HVAC Credits with Help from Diedrick's Heating and Air Conditioning

Partner with local HVAC professionals like Diedrick's Heating and Air Conditioning for help with home energy audits and new installation projects. Our experienced installers will deliver everything you need for home energy efficiency upgrades.