There are many federal issues that either directly or indirectly affects our industry, our members, or the broader energy portfolio. Below are the legislative initiatives on which HPBA is currently working. Browse here to view some of our recent accomplishments in the 111th Congress and some of our past Congressional achievements.
In the past Congressional sessions, HPBA has been able to celebrate many legislative initiatives. Below are the legislative initiatives we are currently developing in the current legislative session-- 111th Congress-- and what we have done in past Congressional sessions.
Each Congressional session is a two-year term. The current cycle was elected in November 2008 and elections will take place in November 2010.
Our Major Legislative Victory
On February 17, 2009 President Obama signed into law, H.R. 1, the American Recovery and Reinvestment Act (ARRA). The Hearth, Patio & Barbecue Association (HPBA) and the Pellet Fuels Institute (PFI) succeeded in getting included in that critical legislation a tax credit for the purchase of a biomass-burning stove to help consumers fight rising home heating costs.
The tax credit is a 30% tax credit of up to $1500 total over a two year period (2009-2010) for the purchase of a 75% efficient biomass-burning appliance. (The "$1500 over two-years" is new!) The tax credit provisions are extended improvements on the legislation that passed in October 2008. The major changes are: 1) an extension of the credit to include 2010; 2) the increase on the credit from $300 to 30% of the total cost; and 3) the lower heating value (LHV) will be used for the efficiency rating rather than the higher heating value (HHV)
In a letter to the IRS in February 2009, the HPBA asked the IRS to issue specific guidance on a number of issues on the tax credit. On June 1, 2009, the Internal Revenue Service (IRS) issued its guidance for this consumer tax credit. While not addressing many of the specific issues raised by the HPBA, this minimal guidance should be sufficient. We understand that the IRS is not expected to issue any further guidance on this tax credit, although HPBA staff will continue to ask for clarifications as needed.
- What is the Biomass-Burning Stove Tax Credit?
- What is the difference between a tax deduction and a tax credit?
- When does this tax credit go into effect and how long will it last?
- How is the value of this tax credit determined?
- What appliances qualify for the tax credit?
- Why was 75% efficiency selected?
- How is the 75% efficiency requirement determined?
- Are biomass stoves installed in new or vacation homes covered by this tax credit?
- If a consumer purchases other products, such as solar collectors or window upgrades, does this mean a biomass stove tax credit can't be taken?
- Will other wood and solid-fuel appliances (like inserts, EPA-certified wood-burning fireplaces and hydronic heaters) qualify for the tax credit?
- How do I ensure that I can collect on my tax credit?
- What should a retailer provide and the customer retain for tax purposes?
- Are installation costs included in this tax credit?
- Does the stove need to be manufactured in the U.S. to qualify for the credit?
- Where can I find more information about this 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 $1,500 credit you can get for buying a qualifying biomass-burning stove or fireplace insert between January 1, 2009 and December 31, 2010. Biomass simply means the stove uses wood or pellet fuel.
Consumers claim the credit on their federal income tax form at the end of the year. This new credit reduces the amount of tax you owe. The new credit is a reduction of total income tax at the bottom of your return, up to $1500. This tax credit is a non-refundable tax credit available for individuals who pay taxes and who make energy-conscious purchases to improve the energy efficiency of their home.
Note: With regard to tax credits vs. tax deductions, in general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions - such as those for home mortgages and charitable giving - lower your taxable income.
As previously stated, 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 $1,500. In general, a tax credit is more valuable than a similar tax deduction.
The tax credit went into effect January 1, 2009 and is valid only for the purchase of a qualifying biomass stove during 2009 and 2010. The maximum tax credit for the two-year period is $1500. The sales receipt must indicate that the purchase was made between January 1, 2009 and December 31, 2010.
When you buy 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.
Any wood- or pellet-burning stove that meets the 75% efficiency rating qualifies for this credit.
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.
The 75% efficiency was designated by the U.S. Congress in 2005 as part of the Energy Policy Act and was used again for this tax credit. Are biomass stoves installed in new or vacation homes covered by this tax credit?
The manufacturer of the stove must provide certification that the product tests for at least a 75% efficiency rating using the lower heating value, i.e., the heat value of a combustion process assuming that none of the water vapor resulting from the process is condensed out, so that its latent heat is not available.
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. The IRS is very clear that this credit applies only to existing principal residences, thus new homes and vacation homes would not qualify, nor would homes owned as rental units.
The IRS did not state that inserts are covered, or are not covered. However, based on EPA's practice of treating inserts and freestanding biomass stoves in a similar fashion, manufacturers may choose to include inserts. At this time (June 2009) it is not clear whether EPA-certified wood-burning fireplaces or hydronic heaters will qualify.
The tax credit is an aggregate, meaning the 2-year $1500 total credit can be used for items other than biomass stoves, such as windows and doors, HVAC and non-solar water heater upgrades, and roof upgrades, all of which are in the same tax credit category as biomass stoves. The tax credit for all of these upgrades is capped at $1500 for the two year period. For example, if a taxpayer uses the entire $1500 for a product in 2009, then they cannot use it in 2010 for any other product in that same tax credit category.
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.
A manufacturer's certification statement must contain the following information:
- The name and address of the manufacturer.
- Identification of the class of qualified energy property (Biomass-Burning Stove) in which the property is included.
- The make, model number and any other appropriate identifiers of the stove.
- A statement that the product is an eligible qualified energy property.
- A manufacturer's certification statement must contain a declaration, signed by a person currently authorized to bind the manufacturer in these matters, in the following form: "Under penalties of perjury, I declare that I have examined this certification statement, and to the best of my knowledge and belief, the facts are true, correct, and complete."
These documents don't need to be attached to your tax return, but you should keep them for your records.
Retailers and consumers must keep exact records of any sale or purchase. Retailers should provide a consumer with the manufacturer's certification statement for the specific product model purchased. A consumer may rely on a manufacturer's certification statement that their products are qualified energy property. A taxpayer is not required to attach the certification statement to the return on which the credit is claimed. A consumer claiming a credit for qualified energy property should retain the certification statement as part of the taxpayer's records. Manufacturers should make this certification document available to consumers on the web, in the product packaging, or in some other easily accessible manner.
Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove. The IRS is silent on the possible need to replace a chimney when upgrading an existing biomass stove; however, the EPA has a section on its website titled, Installation Affects Efficiency, which retailers and consumers should consult when deciding if a chimney replacement is warranted when installing a biomass stove.
No. There is no "Buy America" component to this tax credit.
You can check out the IRS's description.
HPBA will update this website with any new details about the tax credit.
Last updated September 2009.