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 upgrading to more efficient HVAC systems, such as air conditioners. These credits offer a big chunk of the installation costs, provided that homeowners select qualifying equipment and submit the appropriate form.

If you’re worried about a long, complicated process, we can share something that will help! Ambience HVAC, Inc. hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you should know.

Understanding the HVAC Tax Credits

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. The two we’ll cover are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.

However, to apply for the credits, you’ll have to fill out IRS Form 5695. Additionally, this form needs to be submitted during 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 empowers homeowners by offsetting up to $3,200 every year for energy-efficient home upgrades. This amounts to 30% of the total project’s cost. Keep in mind that in order to be eligible for the maximum amount, it involves making different 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 systems are a key target for this incentive, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You’ll need 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 wide range of 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 is instead designed around renewable energy sources like solar and wind energy.

Some specific items in this 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 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 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
  • Upgraded electrical wiring
  • Enhancements to insulation, air sealing, and ventilation
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Heat pump clothes dryers
  • High-efficiency water boilers

Just like with installing one or more HVAC systems, you’ll need to confirm that your chosen products meet the eligible energy efficiency ratings.

Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips

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

  1. Conduct a home energy audit to identify impactful upgrades. Trust experienced HVAC companies to pinpoint essential products and services.
  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. Remember to consider financing plans offered by service providers.

Ambience HVAC, Inc. Can Help You Secure HVAC Credits for 2024

Partner with local HVAC professionals like Ambience HVAC, Inc. for eligible serves like energy assessments or new installation. Our experienced installers will deliver everything you need for home energy efficiency upgrades.