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. 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 choose qualifying equipment and submit the appropriate form.
If you’re worried about a long, complicated process, we can share something that will help! West Michigan Heating & Air Conditioning Services hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you should know.
Understanding the HVAC Tax Credits
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. Two of note are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.
However, in order to claim your credits, you’ll need to fill out IRS Form 5695. Additionally, this form has to be submitted within 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 provides up to $3,200 every year for installing higher efficiency home upgrades. This can be up to 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 get up to $2,000 for installing a higher 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 installation projects are a great use of the program, 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 high enough for eligibility.
Exploring the Residential Clean Energy Credit
The Residential Clean Energy Credit amounts to roughly 30% savings on a variety of residential clean energy equipment upgrades. Eligibility is only extended 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 specific items in 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 major reasons for high energy bills, these tax credits can guide you 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
- Electrical panel upgrades
- Upgraded 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 preferred make and model features the required 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 they offer the most long-term benefits. Get the most from your HVAC tax credits with these three tips:
- Perform an energy audit to pinpoint valuable enhancements. Trust experienced HVAC companies to pinpoint essential products and services.
- Improve your home's thermal efficiency with better windows and doors.
- Look into rebates for clean energy projects from utilities. Renewable sources like solar, wind, and geothermal contribute to community power grid sustainability.
- Remember to consider financing plans offered by service providers.
Secure Your 2024 HVAC Credits with Help from West Michigan Heating & Air Conditioning Services
Partner with local HVAC professionals like West Michigan Heating & Air Conditioning Services for eligible serves like energy assessments or new installation. Our experienced installers know how to provide all you need for a more energy-efficient home.
