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, as long as the homeowners use qualifying equipment and submit the right paperwork.

If you’re worried about a long, complicated process, we can share something that will help! Kilbourne Heating & AC hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. 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 main intention of these credits is to mitigate costs associated with installation and renovation projects. The two we’ll cover are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.

However, 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 bought.

Energy Efficiency Home Improvement Credit

Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 annually for making your home more energy-efficient. This equals 30% of the total project’s cost. Keep in mind that in order to receive the maximum amount, it means making severel investments. For example, you’ll receive 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 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 high enough for eligibility.

Exploring the Residential Clean Energy Credit

The Residential Clean Energy Credit provides 30% savings on a variety of 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 more about renewable energy sources like solar and wind energy.

Some key details of this 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 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 offer more access 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
  • Modern electrical panel improvements
  • New 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

Like the HVAC systems, you’ll need to check that your preferred make and model features the required energy efficiency ratings.

Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips

While any of these upgrades can boost home energy efficiency, a little planning will ensure they offer the most long-term benefits. Maximize your HVAC tax credits with these reminders:

  1. Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
  2. Improve your home's thermal efficiency with better 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 Kilbourne Heating & AC

Partner with local HVAC professionals like Kilbourne Heating & AC for eligible serves like energy assessments or new installation. Our seasoned installers know how to provide all you need for a more energy-efficient home.