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 high efficiency HVAC equipment. These credits offer a big chunk of the installation costs, provided that homeowners work with eligible equipment and submit the right paperwork.

If you’re concerned the application process might be tedious, we’re offering to help! Childress 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 upgrading your home to be more energy-efficient are just one portion 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 reduce the cost of installing high efficiency upgrades. The two we’ll cover are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.

But remember, in order to earn any of the credits, you’ll have to complete IRS Form 5695. Additionally, this form has to be submitted during the same tax year the 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 every year for installing higher efficiency home upgrades. This equals 30% of the total project’s cost. It's important to note in order to get back 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 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, high-efficiency furnaces, air conditioners, boilers, and other HVAC systems are still eligible for this tax credit. You should confirm that your choice’s energy efficiency rating is high enough for eligibility.

Residential Clean Energy Credit

The Residential Clean Energy Credit offers 30% savings on a variety of residential clean energy efficiency projects. Eligibility is only extended to homeowners seeking to update existing or newly constructed homes. While the Home Improvement Credit highlights utilities and HVAC systems, this credit is more about renewable energy sources like solar and wind energy.

Some provisions of the tax credit include requiring the installation project to be finished between 2022 and 2032. But at the same time, homeowners can carry forward excess credit to offset future tax obligations. 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
  • Electrical panel upgrades
  • Upgraded electrical wiring
  • Insulation, air sealing and ventilation enhancements
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Heat pump clothes dryers
  • Water boilers

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

Maximizing Your 2024 HVAC Tax Credits: Top 3 Tips

While any of these upgrades can improve your home’s energy efficiency, a little planning will ensure more long-term benefits. Maximize your HVAC tax credits with these three tips:

  1. Perform an energy audit to pinpoint valuable enhancements. Rely on professional HVAC assessments for crucial advice.
  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.

Childress Heating & AC Can Help You Secure HVAC Credits for 2024

Partner with local HVAC professionals like Childress Heating & AC for eligible serves like energy assessments or new installation. Our helpful installers will deliver everything you need for a more energy-efficient home.