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 upgrading to more efficient HVAC systems, such as air conditioners. These credits offer big savings, as long as the homeowners work with qualifying equipment and submit the appropriate form.

If you’re worried about a long, complicated process, maybe we can help! Brandywine Heating & Air hopes this guide will provide all the information necessary to take full advantage of HVAC tax credits this year. Here’s what you’ll need to do.

Understanding the HVAC Tax Credits

These valuable tax credits for energy-efficient home improvements 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 mitigate costs associated with installation and renovation projects. Of particular importance are the Energy Efficiency Home Improvement Credit and the Residential Clean Energy Credit.

But keep in mind, to apply for the credits, you’ll have to fill out IRS Form 5695. Additionally, this form has to be submitted within the same tax year your upgrades were installed, not purchased.

Energy Efficiency Home Improvement Credit

Through 2032, the Energy Efficiency Home Improvement credit empowers homeowners by offsetting up to $3,200 every year for making your home more energy-efficient. This amounts to 30% of the total project’s cost. Keep in mind that in order to receive the maximum amount, you’ll have to make several investments. For example, you’ll get up to $2,000 for high efficiency heat pump systems. 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’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 amounts to roughly 30% savings on a number of other residential clean energy efficiency projects. Eligibility is only extended 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 more about renewable energy sources like solar and wind energy.

Some key details of 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 spread out costs and keep them more manageable.

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 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:

  • Energy-saving heat pump water heating systems
  • Electrical panel upgrades
  • New electrical wiring
  • Enhancements to insulation, air sealing, and ventilation
  • High-efficiency electric stoves, cooktops, ranges or ovens
  • Efficient heat pump clothes drying solutions
  • High-efficiency water boilers

Like the HVAC systems, you’ll need to check 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 enhance your home's energy performance, some planning ahead will ensure they offer the most long-term benefits. Maximize your HVAC tax credits with the following three tips:

  1. Conduct a home energy audit to identify impactful upgrades. 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. Don’t forget financing options from local service companies, which can help reduce costs even more.

Brandywine Heating & Air Can Help You Secure HVAC Credits for 2024

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