Are you a homeowner looking to invest in an energy-efficient HVAC system? If so, the Inflation Reduction Act allows you to save a substantial amount of money on installation costs. It includes tax credits on qualifying high-efficiency heating and cooling equipment, including furnaces, heat pumps, air conditioners, fans, and more. At Facemyer Air Conditioning & Heating, we always put our clients’ interests first and value their business. Our experts can answer any questions you might have and help you find the best products for your home in Sanford, Lake Mary, Longwood, Oviedo, Winter Park, Winter Springs, or the surrounding areas.
A Brief Overview of the Inflation Reduction Act
The Inflation Reduction Act is a bill that was signed into law in August 2022. It is intended to reduce inflation by lowering the United States deficit and addressing some of the most significant issues facing citizens involving indoor climate control and health care. This legislation provides $740 billion to help with various issues, from household energy efficiency to electric vehicles and the excessive cost of prescription drugs.
By going green, homeowners can receive clean energy tax credits along with additional tax incentives. There are a number of rebates and incentives designed to help homeowners use less energy and lower their carbon footprint. However, the Energy Efficient Home Improvement Tax Credit (25C) – an updated version of the Nonbusiness Energy Property Credit -is probably the most relevant for our purposes.
How the Energy Efficient Home Improvement Tax Credit Works
You might be asking yourself how this program actually works. It’s quite simple for homeowners who invest in qualifying energy-efficient HVAC systems after Jan. 1, 2023. They could be eligible to receive a tax credit of up to $2,000 per year for qualified heat pumps, water heaters, biomass stoves, or biomass boilers. If applicable, you can claim this credit made through 2032. However, the process is slightly more complicated for those who invested in such improvements before 2023. It involves filling out a form provided by the Internal Revenue Service (form 5695).
As of Jan. 1, 2023, the credit equals 30% of certain qualified energy-efficient HVAC improvements installed during the taxable year. It’s important to note that there are limits on the allowable annual credit and the amount of credit for certain types of qualified expenses. You can claim the Energy Efficient Home Improvement Tax Credit for qualifying systems in operation on or after Jan. 1, 2023, and before Jan. 1, 2033. The credit has no lifetime dollar limit, meaning you can claim the maximum amount every year you make eligible improvements or install energy-efficient equipment until 2033.
However, beginning in 2025, no credit will be allowed for each qualifying system unless a qualified manufacturer produced the system and the taxpayer reports the PIN for the item on their tax return. Unfortunately, the Energy Efficient Home Improvement Tax Credit is nonrefundable. This means you can’t get more money back from the credit than you owe in taxes, and you can’t apply any excess credit to your taxes in future years.
Learn More About Potential Savings
The experts at Facemyer Air Conditioning & Heating are here to help you make your world a more comfortable place. As a Trane Comfort Specialist, we’ve established a reputation for consistently delivering exceptional customer service and exceeding our customers’ expectations. If you’d like to learn more about how the Inflation Reduction Act can help you save money on a new HVAC system, give us a call today.
