How do Inflation Reduction Act tax credits work for 2024? (Electric panel upgrade & mini splits installation)
I'm trying to plan ahead for next year's taxes and feeling pretty confused about how the Inflation Reduction Act credits work across different tax years. In 2023, we had our electrical panel upgraded and also purchased mini split equipment, but the actual installation of the mini splits wasn't completed until 2024 when our electrician finally got around to it. Here's what I'm trying to figure out: Can I combine the panel upgrade costs from 2023, the mini split equipment purchased in 2023, AND the installation labor costs from 2024 to claim the full 30% tax credit on our 2024 taxes? Does it all count together as one project? Another complication is that my wife and I might end up exceeding the $150k income cap this year (2024). In 2023 we were definitely under that threshold. If we do go over in 2024, is there any way to still claim the 30% credit against our 2023 taxes even though we've already filed? Or are we just out of luck on getting the full credit? We also bought a qualifying used electric vehicle this year that should be eligible for the $4,000 tax credit. If we do exceed the income cap for 2024, can we somehow apply this credit to our 2023 taxes instead? Or does that work differently than the energy efficiency credits? Any help sorting this out would be hugely appreciated! We're trying to plan our finances and want to make sure we maximize these credits properly.
18 comments
Join the conversation
Keisha Johnson
The Inflation Reduction Act credits can be a bit confusing when projects span multiple years! Let me try to clarify how this works for you. For the energy efficiency home improvements (which includes your panel upgrade and mini splits), you claim the credit in the tax year when the installation was COMPLETED. So if your mini splits weren't fully installed until 2024, you would claim the entire project (panel upgrade, equipment costs, and installation) on your 2024 taxes. The 30% credit applies to the total cost including equipment and labor. Regarding the income limit - this is based on the tax year you're claiming the credit. If your 2024 income exceeds $150k (modified adjusted gross income for a married couple), you may be eligible for a reduced credit, and if it exceeds $160k, you may not be eligible for the credit at all. Unfortunately, you can't go back and amend your 2023 return to claim a credit for an installation completed in 2024. For the used electric vehicle credit ($4,000 or 30% of the sale price, whichever is less), this also depends on when you purchased and placed the vehicle in service. If that was in 2024, you'd claim it on your 2024 return, subject to the income limits for that year (which are different from the home energy credits - $150k for joint filers). You can't apply this to your 2023 taxes unless you purchased and started using the vehicle in 2023. Hope that helps clarify things!
0 coins
Paolo Rizzo
•Wait, so does this mean that if they went over the income cap in 2024, they'd lose the entire credit for the mini splits project, even though they purchased some of the equipment in 2023 when they were under the cap? That seems really unfair! Also, what if they paid for the installation in 2023 but the electrician didn't actually do the work until 2024? Does it matter when you paid or only when the installation was completed?
0 coins
Keisha Johnson
•Yes, unfortunately that's how the credit works. The income limit applies to the tax year when the installation was completed and when you claim the credit. Even if you purchased equipment in a previous year, what matters is when the entire project was finished. The IRS looks at the "placed in service" date, which is when the installation was completed and the system became functional. The timing of payment doesn't matter for these credits - it's all about when the installation was completed. So even if you paid for everything in 2023, if the electrician didn't finish the work until 2024, you would claim the credit on your 2024 taxes and be subject to the 2024 income limits.
0 coins
QuantumQuest
I went through something similar with my heat pump installation last year and found a great solution at https://taxr.ai - they have an Inflation Reduction Act calculator that helped me figure out exactly what credits I could claim. My project also spanned multiple tax years, and I was confused about how to handle the expenses. Their system analyzed all my receipts from both years and showed me exactly how to report everything properly on my taxes. They even created a detailed PDF report that I could give to my tax preparer explaining why certain costs were eligible for the 30% credit and which tax year they needed to be claimed in. Saved me hours of research and probably got me a bigger credit than I would have figured out on my own. The best part was they confirmed I could include my electrical panel upgrade as part of the heat pump project since it was required for the installation, which I wasn't sure about before.
0 coins
Amina Sy
•How does their system handle the income limits for different years? That seems to be the original poster's main concern - that they might go over the limit in the year when they need to claim the credit.
0 coins
Oliver Fischer
•Did they help you understand if labor costs from a different year count toward the credit? I'm in a similar situation where I bought solar panels in 2023 but installation isn't happening until later this year, and I'm worried about going over income limits.
0 coins
QuantumQuest
•They have a really clear explanation of how the income limits work for each credit type and tax year. They showed me that the limits are based on your modified adjusted gross income (MAGI) for the specific tax year when the installation was completed, not when you purchased equipment or made payments. For your solar panel situation, they would analyze the entire project and confirm that all costs (including labor from a different year) would be claimed in the tax year when the installation is completed. What I found helpful was that they also provided some tax planning strategies to potentially reduce your MAGI if you're close to the threshold, like increasing retirement contributions.
0 coins
Oliver Fischer
Just wanted to follow up - I tried https://taxr.ai after seeing the recommendation here and it was super helpful for my situation! I uploaded my receipts from both 2023 (when I bought the solar equipment) and 2024 (when installation is happening) and got a detailed breakdown of exactly how the credits work. They confirmed that I need to claim everything in the year of installation completion and showed me exactly how close I am to the income limits. The report they generated explained all the Inflation Reduction Act rules in plain language, including the different requirements for each type of energy improvement. I was especially relieved to learn about some strategies to keep my MAGI below the income threshold for 2024, which I hadn't considered before. Really glad I checked this out before filing next year!
0 coins
Natasha Petrova
If you're trying to get hold of the IRS to ask specific questions about how these credits work across tax years, good luck... I spent WEEKS trying to get through on their phone lines last year when I had questions about energy credits. Always busy signals or disconnects after waiting for hours. I finally used https://claimyr.com and they got me connected to an IRS agent in about 15 minutes instead of days of trying. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with clarified that with these home energy credits, you have to claim them in the year the project is completed regardless of when you purchased materials or made payments. They also explained how the income phaseouts work specifically for the clean vehicle credits vs the home improvement credits, which have different limits. Worth the service fee not to spend days trying to get through on my own.
0 coins
Javier Morales
•How exactly does Claimyr work? Do they somehow jump you ahead in the IRS phone queue? That seems impossible given how the IRS phone system operates. I'm skeptical this is a legit service.
0 coins
Emma Davis
•Does this actually work for complicated tax questions like the Inflation Reduction Act credits? I tried calling the IRS directly last month about energy credits and gave up after being on hold for over 2 hours. The agent who finally answered seemed confused about the rules themselves and gave me conflicting information.
0 coins
Natasha Petrova
•Claimyr doesn't jump you ahead in the queue - they use an automated system that continually calls the IRS for you and only connects you when they reach a human. It's basically doing the frustrating redial process for you instead of you having to do it manually for hours or days. When they get through, you get a text message and then join the call. Yes, it absolutely works for complicated tax questions. The key is getting through to the right department. When I finally connected, I specifically asked for someone familiar with the Inflation Reduction Act credits. The first agent transferred me to a specialist who was very knowledgeable about the energy efficiency credits and walked me through exactly how the timing works for installations that span multiple tax years. It was definitely worth it to get clear information directly from the IRS.
0 coins
Emma Davis
I need to follow up on my skeptical comment above. I decided to try Claimyr (https://claimyr.com) after continuing to fail getting through to the IRS on my own about my Inflation Reduction Act credits question. It actually worked! I got a text about 20 minutes after signing up saying they had an IRS agent on the line. The agent transferred me to someone in the energy credits department who gave me clear answers about my solar installation that crossed tax years, similar to the original poster's situation. The agent confirmed that all costs (equipment and labor) get claimed in the tax year when the installation is COMPLETED, and that the income limits for that specific tax year apply. They also explained that if I'm over the income limit, I don't lose the entire credit - it phases out gradually between $150k-$160k for married filing jointly. I spent weeks trying to get through on my own without success, so this was definitely worth it. Never thought I'd be recommending a service like this, but it saved me so much frustration.
0 coins
GalaxyGlider
Has anyone tried carrying forward these credits if your tax liability isn't high enough to use them all in one year? I installed mini splits last year but couldn't use the full credit because our tax liability wasn't high enough after other credits.
0 coins
Malik Robinson
•The home energy efficiency credits (like for your mini splits) are non-refundable but can be carried forward for up to 5 years if you can't use the full amount in the installation year. So you don't lose it! But be careful - the rules are different for the clean vehicle credit. The used EV credit that OP mentioned ($4,000) cannot be carried forward, so if you don't have enough tax liability to use it all in the purchase year, you lose the remainder.
0 coins
GalaxyGlider
•Thanks for that info! That's a relief - we only got to use about half of our mini split credit last year, so good to know we can apply the rest to this year's taxes. I didn't realize the EV credits work differently though. That's important for anyone planning to claim both in the same year to consider which one to prioritize if they won't have enough tax liability for both.
0 coins
Isabella Silva
One thing nobody's mentioned yet - make sure you get a Manufacturer's Certification Statement for your mini splits! The IRS has been cracking down on documentation requirements for these credits. You need something from the manufacturer stating that the equipment meets the efficiency requirements for the credit.
0 coins
Yara Sabbagh
•I actually did get documentation from the installer, but it doesn't specifically say anything about meeting IRS requirements or efficiency standards. It's just the invoice with model numbers and installation details. Is that going to be a problem? Should I be requesting something more specific from either the manufacturer or the installer?
0 coins