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Tax Credit FAQ Fact Sheet

  1. What is the Biomass-Burning Stove Tax Credit?
  2. What is the difference between a tax deduction and a tax credit?
  3. How is the value of this tax credit determined?
  4. What appliances qualify for the tax credit?
  5. Are biomass stoves installed in new or vacation homes covered by this tax credit?
  6. How do I ensure that I can collect on my tax credit?
  7. Are installation costs included in this tax credit?
  8. Where can I find more information about this tax credit?

What is the Biomass-Burning Stove Tax Credit?

This federal tax credit encourages people to make energy-conscious purchases that improve the energy efficiency of their home. It is an up to $300 credit you can get for the purchase and installation of a qualifying biomass-burning stove or fireplace insert between January 1, 2012 and December 31, 2013. Biomass simply means the stove uses wood or pellet fuel.

What is the difference between a tax deduction and a tax credit?

A deduction is an expense or amount you can subtract from your taxable income. A tax credit lowers your actual tax bill dollar-for-dollar, in this case by up to $300. In general, a tax credit is more valuable than a similar tax deduction.

How is the value of this tax credit determined?

When you purchase and install a qualifying biomass-burning appliance between January 1, 2009 and December 31, 2010, you get a tax credit of 30% of the total price, up to $1,500 dollars. So, for example, if your wood or pellet stove cost $5,000 (which can include installation), you can deduct $1,500 from the taxes you owe the government.

What appliances qualify for the tax credit?

Any wood- or pellet-burning stove that meets the 75% efficiency rating qualifies for this credit.

At least 75% of the energy is used to heat the home.

Manufacturers test their products to certify they meet this efficiency standard and the IRS-required certification  will come with the product straight from the appliance manufacturer. Visit your local specialty retailer who can explain which products they have will qualify for the tax credit.

Are biomass stoves installed in new or vacation homes covered by this tax credit?

No. The credit only applies to your existing principal residence. New homes and vacation homes don't qualify, nor do homes owned as rental units.

How do I ensure that I can collect on my tax credit?

Save your receipt that proves you purchased the qualifying appliance between January 1, 2009 and December 31, 2010. You'll also need a manufacturer's certification statement that states your product meets the 75% efficiency rating needed to qualify for this tax credit.

Your specialty retailer will give you the manufacturer's certification statement that must include:

  • The name and address of the manufacturer.
  • Identification of the class of qualified energy property (e.g., biomass-burning stove).
  • The make, model number and any other appropriate identifiers of the stove.
  • A statement that the product is an eligible qualified energy property.
  • A signature of a person able to bind the manufacturer to the above standards.

These documents don't need to be attached to your tax return, but you should keep them for your records.

Are installation costs included in this tax credit?

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove.

Where can I find more information about this tax credit?

Our Government Affairs Issues & Legislation section answers some of the more technical questions on the tax credit legislation. You can also check out the IRS's description.

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