Taxpayers may claim the credit on their federal income tax return form, starting on their 2021 return. The credit is a reduction of total income tax owed. This is a non-refundable tax credit available for individuals who pay federal taxes and who make energy-conscious purchases to improve the energy efficiency of their home.

If your tax owed is reduced to zero by this credit, but you still have money left to claim, it can be carried over to the next tax year to further reduce your tax burden in the future.

Paper Filing: The credit can be claimed on IRS Form 5695 under Residential Energy Efficient Property Credit. 

Electronic Filing: If you are using tax filing software, the credit generally will be found under the "Credits" section of the Federal portion (Home Ownership – Residential Energy Credit).

If you made a qualifying purchase and installation in a previous tax year and want to claim the credit, you need to file an amended return using IRS Form 1040-X. 

You should retain (1) the sales receipt and any installation paperwork and (2) the manufacturer’s certification statement (if not available, documentation that the heater is at least 75 percent HHV efficient). 

The sales receipt and installation documentation demonstrates that you purchased and completed installation of the qualifying heater during the effective time period of the credit. The retailer from whom you purchased the qualifying heater should also provide you with a manufacturer's certification statement indicating that the product qualifies for the tax credit. You aren't required to have a certification statement in order to claim the tax credit. A screenshot or printout of the product manual page listing the efficiency as at least 75 percent efficient per the HHV is sufficient.

The certification statement should contain the name and address of the manufacturer; the class of qualified energy property; the make, model number and any other appropriate identifiers of the heater; a statement that the product is eligible; and a declaration, signed by a person currently authorized to bind the manufacturer in these matters (e.g. 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.).

Manufacturers should make this certification document available to consumers on their website, in the product packaging, or in some other easily accessible manner.

Yes. Installation costs are included. Sales tax can also be included.

Installation costs cover expenditures for labor costs for onsite preparation, assembly, or original installation of the qualified heater. This also includes any venting/piping/wiring to connect the heater to the home.

To ensure that your stove burns as efficiently, cleanly, and safely as possible, be sure to have it installed by a professional credentialed by the National Fireplace Institute.

Yes.

Unlike the old Sec. 25(C) tax credit (now expired), you can claim this tax credit for purchasing and installing a qualifying heater in a new home and a secondary/vacation home. The secondary/vacation home cannot be an "investment property," such as a rental property that is not used by the taxpayer as a residence.

Regarding new homes, a taxpayer can claim this credit for qualifying heaters installed in an existing home or a newly constructed home. 

See the new home FAQ for additional discussion on how to claim the credit for a product installed in a new home.

The taxpayer may request that the homebuilder make a reasonable allocation or the taxpayer may use any other reasonable method to determine the cost of the property that is eligible for the Sec. 25(D) credit. Installation costs cover expenditures for labor costs for onsite preparation, assembly, or original installation of the qualified heater. This also includes any venting/piping/wiring to connect the heater to the home.

Yes. As long as the taxpayer begins to use the house as a residence before the tax credit expires, the taxpayer may claim the Sec. 25(D) credit in Year 2. 

Sec. 25(D(e)(8) treats an expenditure in connection with the construction or reconstruction of a structure as made when the taxpayer begins to originally use the constructed or reconstructed structure as a residence.

If the same scenario occurs with a model home, and the qualifying heater was used during the time it was marketed for sale, the taxpayer can still claim the Sec. 25(D) credit in Year 2. The expenditure is treated as made when the use of the structure as a residence begins.

No. Sec. 25(D)(e)(8) generally treats an expenditure as made when the original installation of the qualifying property is completed.

Only the taxpayer who begins the original use of the constructed or reconstructed structure as a residence or the taxpayer using the home as a residence when the property was originally installed is eligible for the tax credit.

Taxpayers may claim the credit on their federal income tax return form. The credit is a reduction of total income tax at the bottom of your return of $300. This is a non-refundable tax credit available for individuals who pay federal taxes and who make energy-conscious purchases to improve the energy efficiency of their home.

Paper Filing: The credit can be claimed on IRS Form 5695 on line 22a (Residential energy property costs -- Energy-efficient building property).

Electronic Filing: If you are using tax filing software, the credit generally will be found under the "Credits" section of the Federal portion (Home Ownership – Residential Energy Credit).

If you made a qualifying purchase and installation in a previous tax year and want to claim the credit, you need to file an amended return using IRS Form 1040-X. 

You should retain (1) the sales receipt and (2) the manufacturer’s certification statement. The sales receipt demonstrates that you purchased the qualifying stove during the effective time period of the credit. The retailer from whom you purchased the qualifying stove should also provide you with a manufacturer's certification statement indicating that the product is qualified for the tax credit. You aren't required to have a certification statement in order to claim the tax credit.

This certification statement should contain the name and address of the manufacturer; the class of qualified energy property; the make, model number and any other appropriate identifiers of the stove; a statement that the product is eligible; and a declaration, signed by a person currently authorized to bind the manufacturer in these matters (e.g. 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.).

Yes. Installation costs are included. To ensure that your stove burns as efficiently, cleanly, and safely as possible, be sure to have it installed by a professional.

No. The credit only applies to a purchase made for your existing principal residence.

This tax credit is valid only for the purchase and installation of a qualifying biomass stove made before December 31, 2020. Consumers would claim the tax credit in the year in which it was purchased.

This U.S. federal tax credit encourages people to make energy-conscious purchases that improve the energy efficiency of their home. It is a $300 dollar-for-dollar, non-refundable, tax credit for purchasing a qualifying biomass-burning stove before December 31, 2020. Biomass simply means the stove uses wood or pellet fuel.

Any biomass appliance that meets or exceeds an energy efficiency rating of 75 percent qualifies for this credit. This credit applies to qualifying stoves that heat the air or water. However, visit your local specialty retailer who can explain which products qualify for the 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."

Yes, but only if you haven't already exceeded the $500 lifetime cap of the credit. If you  have exceeded the $500 lifetime cap of the credit, you may not claim it again.

The non-business energy property credit (which covers the biomass stove tax 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 $500 per consumer for all expenditures claimed under the credit since December 31, 2005.

The 75 percent efficiency number was originally designated by the U.S. Congress in 2008 as part of the Emergency Economic Stabilization Act and was used again for this tax credit.

No, there is no "Buy America" component to this tax credit.

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 the qualified non-business energy property should retain the certification statement as part of their tax records if a certification statement is provided.

Manufacturers should make this certification document available to consumers on their website, in the product packaging, or in some other easily accessible manner.