To combat increasing energy expenses and embrace sustainability, 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 energy-efficient home upgrades, especially HVAC systems like air conditioners. These credits offer a big chunk of the installation costs, provided that homeowners select qualifying equipment and submit the right paperwork.

If you’re trying to avoid a long process, we can share something that will help! Fal-Ken Heating & Cooling Corporation 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.

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 key provision of these credits is to mitigate costs associated with installation and renovation projects. Of particular importance are the Residential Clean Energy Credit and the Energy Efficiency Home Improvement Credit.

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

Maximizing Savings with the Energy Efficiency Home Improvement Credit

Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 annually for energy-efficient home upgrades. This equals 30% of the total project’s cost. You should be aware that in order to get back the maximum amount, you’ll have to make several investments. For example, you’ll receive up to $2,000 for installing a higher 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, other HVAC upgrades like efficient furnaces and air conditioners also qualify. You’ll need to confirm the make and model’s energy efficiency rating is sufficient to qualify.

Residential Clean Energy Credit

The Residential Clean Energy Credit offers 30% savings on a variety of residential clean energy equipment upgrades. Eligibility is restricted to homeowners looking for new clean energy solutions for their home. While the Home Improvement Credit highlights utilities and HVAC systems, this credit targets 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 carry forward excess credit to offset future tax obligations. This is a great way to make things a little easier when investing in renewables.

Additional Qualifications for Energy 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:

  • Energy-saving heat pump water heating systems
  • Electrical panel upgrades
  • Upgraded 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 verify 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 of these upgrades can enhance your home's energy performance, some planning ahead will ensure the best chance at more long-term benefits. Maximize your HVAC tax credits with the following three tips:

  1. Conduct a home energy audit to identify impactful upgrades. Rely on professional HVAC assessments for crucial advice.
  2. Improve your home's thermal efficiency with better 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 Fal-Ken Heating & Cooling Corporation

Partner with local HVAC professionals like Fal-Ken Heating & Cooling Corporation for help with home energy audits and new installation projects. Our experienced installers can deliver whatever you need for a more energy-efficient home.