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 high efficiency HVAC equipment. These credits offer significant savings, provided that homeowners select qualifying equipment and submit the appropriate form.

If you’re concerned the application process might be tedious, maybe we can help! Freed Heating & Air Conditioning 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 upgrading your home to be more energy-efficient 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 main intention of these credits is to help pay for high efficiency HVAC equipment and other projects. Of particular importance are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.

Don’t forget, to apply for the credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted within the same tax year any upgrades were installed, not bought.

Energy Efficiency Home Improvement Credit

Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 each year for energy-efficient home upgrades. This equals 30% of the total project’s cost. You should be aware that in order to be eligible for the maximum amount, it means making severel investments. For example, you’ll receive 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 great use of the program, other HVAC upgrades like efficient furnaces and air conditioners also qualify. 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 only applies to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit focuses on utilities and HVAC systems, this credit is instead designed around 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 use any excess credit to reduce taxes in future years. This is a great way to soften the entry into investing in clean energy.

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 lots of 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
  • Upgraded electrical wiring
  • Insulation, air sealing and ventilation enhancements
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Heat pump clothes dryers
  • Water boilers

Just like with installing one or more HVAC systems, you’ll need to verify 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 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:

  1. Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
  2. Improve your home's thermal efficiency with better 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.

Freed Heating & Air Conditioning Can Help You Secure HVAC Credits for 2024

Partner with local HVAC professionals like Freed Heating & Air Conditioning for eligible serves like energy assessments or new installation. Our seasoned installers can deliver whatever you need for a more energy-efficient home.