Understanding the Federal Biomass Stove 25(C) Tax Credit

With the uncertainty of natural gas and propane costs, wood and biomass fuels are viable alternatives that can give homeowners peace of mind in cold winter weather. For this reason, many have chosen to invest in wood or pellet stoves as heat sources.

But pellet and wood stoves don’t just create warm, cozy spaces and offer peace of mind; they also offer serious cost savings! There’s a federal biomass tax credit available for anyone who purchases and installs a qualifying stove. The credit is for both material (stove, venting, etc.) and the cost of installation (labor, permit, etc.).

If you’re considering a new fireplace or heating system for your property, would like to learn more about wood and pellet stoves, and would like to take advantage of a tax credit, keep reading.

What Is the Federal Biomass Stove 25(C) Tax Credit?

The Federal Biomass Stove 25(C) Tax Credit is also known as the Wood and Pellet Heater Investment Tax Credit. It’s a financial incentive for anyone who installs a highly efficient heating system (typically a wood or pellet stove) that runs on wood and biomass fuels.

The credit is referenced under Section 25(C) of the Internal Revenue Code (IRC) and runs from January 1, 2023 to December 31, 2032. It’s the latest version of an energy credit that was just passed with the Inflation Bill. The Hearth, Patio & Barbecue Association (HPBA) had advocated for the Biomass Thermal Utilization Act for years, and this credit was a big part of their push.

There have been several different energy credits over time, dating back to the 1970s. Since then, the credits have evolved along with new technologies and environmental standards. Just prior to this one was a credit referenced under Section 25(D) of the IRC. Now that the new 25(C) credit is effective, the 25(D) credit will be eliminated.

However, any product that was purchased in 2022 but is not installed until 2023, and that qualifies for the 25(C) credit, can be claimed on a 2023 tax return.

What Does the Biomass Tax Credit Mean for Wood Stove Purchasers?

So what exactly does this mean for those who purchase a wood or pellet stove? What are the financial incentives on the table?

Anyone who is eligible for the Federal Biomass Stove 25(C) Tax Credit can claim a 30% tax credit, based on the combined cost of the unit and installation. The credit is capped at $2,000 annually.

This is a huge cost savings for anyone who purchases a qualifying stove. The U.S. government has realized the benefits of these high-efficiency heating products and is rewarding those who install them.

How to Know If You’re Eligible for the Biomass Tax Credit

The eligibility terms for the biomass tax credit are fairly straightforward: buy a qualifying stove between January 1, 2023 and December 2032. In order for a stove to qualify, it must:

• Operate using wood or biomass fuels
• Have a thermal efficiency of at least 75% per the higher heating value (HHV) of the fuel
• Have a manufacturer certification statement verifying that the product qualifies

If you’d like, you can use the Environmental Protection Agency (EPA)’s Certified Wood Stove Database as a reference. Just keep in mind that not all of the products on this list qualify; look for the ones with at least 75% efficiency.

Where Can I Find More Information?

If you’d like to gather more information about wood stoves and the Federal Biomass Stove 25(C) Tax Credit, there are a few trusted resources we recommend checking out.

• HPBA’s website or supplier locator tool
• EPA’s website

For more personalized resources and recommendations, you could also contact a trusted wood stove supplier, like our team at VanderWall Bros. We’ll be able to walk you through which stoves are eligible and answer any questions you have about receiving your tax credit. We also provide installation and maintenance services to keep your stove looking and functioning well for years to come.

Take Advantage of the Biomass Tax Credit & Buy a Wood Stove From VanderWall Bros.

If you’re interested in taking advantage of the Federal Biomass Stove 25(C) Tax Credit, VanderWall Bros. can help. We supply a full selection of highly efficient wood and pellet stoves from top manufacturers like: Jøtul®, HearthStone®, Osburn, Harman®, Vermont Castings™, and Napoleon. For more information on what products qualify and how to get started, contact our team.