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. Included in the Inflation Reduction Act, federal tax credits are available for upgrading to more efficient HVAC systems, such as air conditioners. These credits offer significant savings, as long as the homeowners work with qualifying equipment and submit the right paperwork.

If you’re worried about a long, complicated process, we’re offering to help! AC Sales 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.

Understanding the HVAC Tax Credits

These valuable tax credits for energy-efficient home improvements 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 primary goal 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.

However, in order to earn any of the credits, you’ll have to fill out IRS Form 5695. Additionally, this form has to be submitted during the same tax year your 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 amounts to 30% of the total project’s cost. It's important to note in order to receive the maximum amount, it involves making different investments. For example, you’ll save up to $2,000 for a new, high-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 popular option for the tax credit, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You’ll need to confirm the make and model’s energy efficiency rating is high enough for eligibility.

Exploring the Residential Clean Energy Credit

The Residential Clean Energy Credit amounts to roughly 30% savings on a variety of residential clean energy equipment upgrades. Eligibility only applies 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 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 can guide you to 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
  • Electrical panel upgrades
  • New electrical wiring
  • Insulation, air sealing and ventilation enhancements
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Efficient heat pump clothes drying solutions
  • Water boilers

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

Three Tips for Making the Most of 2024 HVAC Tax Credits

While any one of those upgrades can enhance your home's energy performance, a little planning will ensure more long-term benefits. Get the most from your HVAC tax credits with these reminders:

  1. Perform an energy audit to pinpoint valuable enhancements. Rely on professional HVAC assessments for crucial advice.
  2. Install new high efficiency windows and doors.
  3. Look into rebates for clean energy projects from utilities. 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 AC Sales

Partner with local HVAC professionals like AC Sales for help with home energy audits and new installation projects. Our seasoned installers will deliver everything you need for a more energy-efficient home.