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Biomass Stove Tax Credit

Biomass Stove Tax Credit

January 2023 Update: In December 2022, the IRS issued its new Guidance and FAQs for the new 25(C) tax credit (effective for installations January 1, 2023 and December 31, 2032) and updated its guidance for the expiring 25(D) tax credit (effective for installations between January 1, 2021 and December 31, 2022) can be found at the button link below. HPBA highlighted the important Sections of the Guidance and FAQs. 

HPBA has also updated its one-pager information page for retailers, which can be found at the button link below.


Click here for more information on the Biomass Stove Tax Credit

IRS Biomass Stove Tax Credit Related Guidance

Over the years, the IRS has issued a few guidance documents with content related to the biomass stove (Sec. 25C) tax credit. While our FAQs listed below are a good place to start, we strongly encourage you to review the IRS guidance documents linked below. 

IRS Notice 2009-53 Guidance

(See pages 5 and 12-17)

Provides procedures that manufacturers may follow to certify property as either eligible building envelope components or qualified energy property. Biomass stoves are considered “qualified energy property. The guidance document also provides conditions under which taxpayers seeking to claim the credit may rely on a manufacturer’s certification.

IRS 2013 Guidance

(See pages 2-3, 5-7)

Updates previous guidance document with changes made by additional authorizing legislation. Includes a more in-depth FAQ section.


How can I claim this tax credit on my tax return?

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 30 percent of the qualifying costs, up to a max of $2,000 in the year installation is completed. 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

What paperwork should a consumer retain for their personal tax records?

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 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.

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., I attest that I have examined this certification statement, and to the best of my knowledge and belief, the facts are true, correct, and complete.).

Are installation costs included in this tax credit?

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

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

Yes. While previous biomass tax credits allowed only installations in primary residences to be claimed, the IRA permits biomass heaters installed in the US at a residence of the taxpayer (not necessarily the taxpayer’s principal residence) to receive the credit.

When does this tax credit go into effect and how long will it last?

This tax credit is valid for the purchase and installation of a qualifying biomass stove made before on or after January 1, 2023. Qualifying appliances purchased and installed in 2021 or 2022 are eligible for the 25(D) tax credit.

What is the Biomass Stove Tax Credit? What products qualify?

This U.S. federal tax credit encourages people to make energy-conscious purchases that improve the energy efficiency of their home. It is a 30 percent, non-refundable tax credit for purchasing and installing a qualifying biomass-burning stove before between January 1, 2023 and December 31, 2032. 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.

What should a manufacturer's certification statement contain?

A manufacturer's certification statement should 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."

If someone claimed this tax credit in past years, may they claim it again this year?

Yes. The Inflation Reduction Act “resets” all previous caps on the amount claimable. Even if you have exceeded the $500 lifetime cap under the 2008 – 2020 version of the credit, you can now claim up to the full $2,000 in any year where you purchase and install a qualifying appliance.

The provisions of the non-business energy property credit covering biomass stoves also contains heat pumps. This means that, if a consumer purchases a qualifying heat pump and stove in the same year, the maximum claimable credit for that year is $2,000. Other qualifying purchases, such as windows and doors, HVAC and non-solar water heater upgrades, and roof upgrades are subject to other restrictions (such as different percentages of expenses credited, different annual limits, or types of residences where they can be installed.

Why was 75 percent efficiency selected?

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.

Does the stove need to be manufactured in the U.S. to qualify for the credit?

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

What should a retailer advise the customer retain for tax purposes?

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.