Biomass Stove Tax Credit

UPDATE: In late December 2019, the biomass stove tax credit was extended for qualifying purchases made before December 31, 2020. Remind consumers that they are able to claim the credit on their 2018 and 2019 returns if they made a qualifying purchase in those tax years. Tax credit extended to December 31, 2020

Every year, many U.S. taxpayers fail to take advantage of the tax credits for which they're eligible. HPBA works to ensure that the $300 biomass stove tax credit is not forgotten. The U.S. federal government offers a tax credit to tax-paying homeowners who purchase a wood or pellet stove that is at least 75 percent efficient. 

Tax credits are powerful incentives for consumers to invest in new biomass-fueled stoves and energy conservation technology. For nearly a decade, HPBA has worked in Washington, D.C. to maintain a tax credit for purchasers of new biomass stoves so that communities and individuals can reap the financial and environmental benefits that newer, more efficient technology provides. 

HPBA continues to fight for another extension of this important incentive for consumers to invest in cleaner, more efficient technology. 

Download our quick reference one-pager on what consumers need to know

View HPBA's position statement.


What is it?

A $300 tax credit for purchasing a biomass stove that is at least 75 percent efficient.

How to Claim It:

Freestanding Stove

Complete eligible purchase by December 31, 2020.

Retain the receipts from your purchase as well as the manufacturer certificate stating the stove qualifies.

Claim the credit on your federal income tax form.

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

NOTE: These instructions will be updated with new information as soon as it is available. Below are the instructions for 2017.

  • File Via Tax Software: Located in the “credits” section of the Federal portion under home ownership and residential energy credit. 
    • NOTE: H & R Block has informed us that they will update their software on March 7, 2018 to reflect the extension of the stove tax credit for 2017 purchases.
  • File Via U.S. Mail: Usually located on line 22a of IRS form 5695 under residential energy property costs and energy-efficient building property. The IRS provides additional instructions for this form.

 


 

For more information, see our FAQs at the bottom of this page. 

Have questions? Contact Rachel Feinstein.

    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.

      FAQs

      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 $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

      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 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.).

      Are installation costs included in this tax credit?

      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.

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

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

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

      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.

      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 $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.

      What must a manufacturer's certification statement contain?

      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."

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

      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.

      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.