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. With help from the Inflation Reduction Act, federal tax credits are available for energy-efficient home upgrades, especially HVAC systems like air conditioners. These credits offer big savings, as long as the homeowners use eligible equipment and submit the appropriate form.

If you’re concerned the application process might be tedious, maybe we can help! Franklin's Heating & Air Conditioning, Inc hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. Here’s what you should know.

How Do These Tax Credits Work?

These valuable tax credits for energy-efficient home improvements are just one small part 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.

But remember, in order to be eligible for tax credits, you’ll need a completed IRS Form 5695. Additionally, this form is submitted for the same tax year the 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. You should be aware that in order to be eligible for the maximum amount, you’ll have to make several investments. For example, you’ll get 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 heat pumps are a popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. It will help to confirm the make and model’s energy efficiency rating is sufficient to qualify.

Exploring the Residential Clean Energy Credit

The Residential Clean Energy Credit provides 30% savings on a number of other residential clean energy equipment upgrades. Eligibility is restricted to homeowners looking for new clean energy solutions for their home. 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 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 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 portions of your monthly energy costs, these tax credits incentivize 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
  • Upgraded electrical wiring
  • Enhancements to insulation, air sealing, and ventilation
  • Energy-efficient cooking appliances like stoves, cooktops, and ovens
  • Heat pump clothes dryers
  • Water boilers

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

Three Tips for Making the Most of 2024 HVAC Tax Credits

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

  1. Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
  2. Install new high efficiency 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.

Franklin's Heating & Air Conditioning, Inc Can Help You Secure HVAC Credits for 2024

Partner with local HVAC professionals like Franklin's Heating & Air Conditioning, Inc for help with home energy audits and new installation projects. Our seasoned installers will deliver everything you need for home energy efficiency upgrades.