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 energy-efficient home upgrades, especially HVAC systems like air conditioners. These credits offer big savings, as long as the homeowners work with qualifying equipment and submit the appropriate form.

If you’re concerned the application process might be tedious, maybe we can help! Luikart Heating & Cooling hopes this guide will give you everything you need to earn these HVAC tax credits in 2024. 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 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.

Don’t forget, to claim your credits, you’ll need a completed IRS Form 5695. Additionally, this form is submitted for the same tax year your upgrades were installed, not bought.

Maximizing Savings with the Energy Efficiency Home Improvement Credit

Through 2032, the Energy Efficiency Home Improvement Credit provides up to $3,200 every year for energy-efficient home upgrades. This can be up to 30% of the total project’s cost. It's important to note in order to be eligible for the maximum amount, it means making severel investments. For example, you’ll save up to $2,000 for a new, high-efficiency heat pump. This can be combined with the remaining $1,200 in credits for other eligible upgrades made within the tax year.

While new heat pump systems are a popular option for the tax credit, other HVAC upgrades like efficient furnaces and air conditioners also qualify. It will help to confirm that your choice’s energy efficiency rating is sufficient to qualify.

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 is restricted 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 more about renewable energy sources like solar and wind energy.

Some specific items in this tax credit include requiring the installation project to be finished 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 major reasons for high energy bills, 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
  • New electrical wiring
  • Enhancements to insulation, air sealing, and ventilation
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Efficient heat pump clothes drying solutions
  • Water boilers

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

Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips

While any one of those upgrades can improve your home’s 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. Enhance your home's envelope by addressing inefficient 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.

Secure Your 2024 HVAC Credits with Help from Luikart Heating & Cooling

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