To avoid rising energy costs and work toward a more sustainable life, many homeowners are trying new methods to maintain comfort levels while using less energy. As part of the Inflation Reduction Act, federal tax credits are available for high efficiency HVAC equipment. These credits offer big savings, provided that homeowners use 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 give you everything you need to earn these HVAC tax credits in 2024. Here’s how.

Understanding the HVAC Tax Credits

These valuable tax credits for boosting your home’s energy efficiency are just one portion 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 key provision of these credits is to reduce the cost of installing high efficiency upgrades. The two we’ll cover are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.

Don’t forget, to be eligible for tax credits, you’ll need a completed IRS Form 5695. Additionally, this form needs 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 empowers homeowners by offsetting up to $3,200 every year for making your home more energy-efficient. 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 involves making different investments. For example, you’ll save 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 systems are a popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You should 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 variety of residential clean energy efficiency projects. Eligibility is only extended to homeowners looking for new clean energy solutions for their home. While the H