Changeouts & Stove Tax Credits

Tax Credits:

HPBA Tax credit website page: click here 

Biomass Stove 30% Tax Credit Enacted for appliances installed between Jan 1, 2023 to Dec 1, 2032!

With the August 16, 2022, signing of the Inflation Reduction Act (IRA), high-efficiency biomass heating products once again qualify for a tax credit under Section 25(C) of the Internal Revenue Code (“IRC” or “tax code”). This new 30 percent tax credit – capped at $2,000 annually – is available for appliances installed between January 1, 2023, and December 31, 2032. The credit can be used on the purchase and installation costs of qualifying appliances. To be eligible for the tax credit, an appliance must have a thermal efficiency of at least 75 percent per the higher heating value (HHV) of the fuel.

Beginning in 2023, consumers buying highly efficient wood or pellet stoves or larger residential biomass heating systems may be eligible to claim a 30% tax credit – capped at $2,000 annually – based on the full cost (purchase and installation) of the unit. The credit runs through December 31, 2032. The 10-year term and 30 percent credit have been big components of HPBA’s advocacy push of the Biomass Thermal Utilization (BTU) Act over many years.

Feel free to contact Ryan Carroll (Carroll@hpba.org) with any questions that are not answered by our website.

What is this tax credit?

• Effective Dates: The new tax credit under Sec. 25(C) of the U.S. Internal Revenue Code (“IRC” or “tax code”) is effect on January 1, 2023 for qualifying purchases and installations completed on or after that date, through December 31, 2032.
• 30 percent of the purchase and installation costs (with a $2,000 annual cap with no lifetime limit) for tax years 2023 through 2032.
• 75 percent per the higher heating value (HHV) of the fuel
  • EPA certified wood heater database may be referenced (not all products on the EPA list qualify. Look for products with efficiencies of at least 75 percent)
  • A manufacturer certification statement attesting that a product qualifies can also be relied upon

See our new FAQs about this new tax credit for additional information.

• Qualifying Products: Require qualifying products (any biomass-fueled heater) be at least 75 percent efficient per the higher heating value (HHV) of the fuel
  • Further IRS guidance on qualifying products will likely be provided in 2021
  • In the meantime, the EPA certified wood heater database may be referenced
  • IRS Guidance
  • Retailer One-Pager

What happens to the 25(C) tax credit?

• Eliminates the tax credit for biomass stoves under IRC Sec. 25(C) starting in 2021 and enacts this provision in its place
• Any product purchased in 2020 that qualifies for the new Sec. 25(D) credit, but isn't installed until 2021, can be claimed under the Sec. 25(D) credit on a 2021 tax return. Products must be claimed on the tax return year in which the product installation is complete. 

See our new FAQs about this new tax credit for additional information.

Download the consumer one-pager here

The Sec. 25(C) Tax Credit for Biomass Stoves (2020)

The Sec. 25(C) biomass stove tax credit expired after December 31, 2020. The credit must be claimed in the year in which product installation was completed.

With this credit having expired, 2020 is the last year the biomass stove tax credit of $300 can be claimed on a tax return. Download the consumer one-pager here

Changeouts by State:

North Dakota:

South Dakota:

Nebraska:

IOWA:

Minnesota:

Wisconsin:

UP of Michigan: