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A Federal Tax Credit for Efficient Wood & Pellet Heating Appliances

Beginning in 2021, consumers buying highly efficient wood or pellet stoves or larger residential biomass heating systems may be eligible to claim a 26% tax credit that is uncapped and based on the full cost (purchase and installation) of the unit. The credit will remain at 26% through this year and next, and then step down to 22 percent in 2023. This provision is part of the BTU Act, which has been actively supported by HPBA for the last several years and has been part of our Advocacy Day requests to Members of Congress. -HPBA website

The new tax credit applies to the purchase of all qualifying biomass-fueled heaters on installations completed prior to December 31, 2023. Qualifying products include 2020 EPA certified wood stoves or inserts with a listed efficiency of 75% or better.

What is this tax credit?

  • Effective Dates: The new tax credit under Sec. 25(D) of the U.S. Internal Revenue Code (“IRC” or “tax code”) came into effect on January 1, 2021 for qualifying purchases and installations completed on or after that date, through December 31, 2023

  • Credit Amount: Creates a new tax credit of 26 percent of the purchase and installation costs (with no cap or lifetime limit) for tax years 2021 and 2022; moves down to 22 percent of purchase and installation costs in 2023 (under Sec. 25D of the U.S. tax code)

  • Qualifying Products: Qualifying products (any biomass-fueled heater) must have a thermal efficiency of at least 75 percent per the higher heating value (HHV) of the fuel

    • The 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

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. 

  • Note: Please consult your Tax Advisor, prior to purchase, to confirm your eligibility for this tax credit.

Get a Quote

  • All units listed in our store are priced with basic required options and or all black options. If you would like other options please contacts us and we can put together a custom quote for you.

  • Some units are taking up to 6-8 weeks to ship and are built when ordered, please contact us via email or form below to verify stock status and estimated delivery time prior to placing a order online if you need by a certain date .

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