The Benefits of Biomass Tax Credit for Wood and Pellet Stoves

 

High-efficiency wood-burning insert by Regency

By Marge Padgitt

Homeowners planning to install an alternative heating appliance should review the Biomass Tax Credit that provides an incentive for homeowners to install highly efficient wood and pellet stoves. This tax credit, which runs from January 1st, 2023, to December 31st, 2032, allows eligible taxpayers to receive a credit of 30% of the purchase and installation costs, up to $2,000 annually.

The Biomass Tax Credit, enacted as part of the Inflation Reduction Act, was implemented to promote the adoption of more sustainable and efficient heating options in residential properties. This tax credit is applicable to wood and pellet stoves that meet specific criteria. To qualify for the credit, the stoves must have a thermal efficiency of at least 75% per the higher heating value (HHV) of the fuel, and be listed as an approved appliance. The tax credit is available for purchases and installations completed between January 1, 2023, and December 31, 2032.

In recent years, wood-burning appliance manufacturers have improved efficiency over their older models. Biomass fuel, which includes wood and wood-derived pellets, offers several advantages over traditional heating methods. One of the key benefits is its lower carbon footprint compared to fossil fuels. Biomass fuel is considered renewable as it is derived from organic materials, such as wood waste and agricultural crops. When burned in high-efficiency stoves, biomass fuel emits minimal greenhouse gases, contributing to reduced environmental impact. Additionally, biomass fuel is often sourced locally, supporting local economies and reducing dependence on foreign energy sources.

It is important to choose a stove that meets the thermal efficiency requirements to be eligible for the tax credit. Not all stoves meet these standards. There are stoves available at large box stores that do not meet the requirements, so choose a reputable hearth retailer or chimney service company to get a quality appliance. To identify qualifying products, individuals can refer to the Environmental Protection Agency's certified wood heater database, which lists stoves with efficiencies of at least 75%. Ask your hearth retailer or chimney sweep about the stoves they carry that qualify for the tax credit.

To claim the Biomass Tax Credit, homeowners must keep receipts for the purchase and installation, and the manufacturer's tax credit certificate. The manufacturer's certificate can typically be found on the manufacturer's website and should include information such as the manufacturer's name and address, the stove's make and model, proof of eligibility, and the manufacturer's signature. When filing taxes, individuals should complete Form 5695, available from the Internal Revenue Service (IRS), and include the necessary information, or give the information to your accountant. The credit offsets tax you owe, and it is not refunded to you.

Several manufacturers sell wood and pellet stoves that qualify for the Biomass Tax Credit. These include Regency, Quadra-Fire, Harman, Hearthstone, and Vermont Castings.

Like any heating system, biomass stoves require regular maintenance to ensure optimal performance and safety. Contact a professional chimney sweep for this service. Stoves should be swept annually, or bi-annually if used for continual heating purposes to remove flammable creosote. Only burn cordwood in the appliance and never burn treated wood, hedge, paper, or railroad ties. It is critical to follow the manufacturer's guidelines for cleaning, inspection, and maintenance.

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Marge Padgitt is the president of HearthMasters, Inc. in Independence, Missouri. She is the author of Wood-Fired Heating and Cooking and The Chimney and Hearth Pro's Resource Book. www.chimkc.com

The Tax Credit for Wood-Burning Appliances is Impressive

Hearthstone fireplace insert

 
With the new Residential Energy Efficient Property Credit Consumers can take 26% of the cost for a new wood-burning stove or fireplace insert, including the appliance, venting, and installation in 2021-2022.  

That is a big deal. Anyone who has considered purchasing a high-efficiency wood stove but held off due to the cost, now is the time to take advantage of the government program. 

Wood-burning appliances can be used for supplemental or primary heating, and in power outages. Anyone who has gone through a power outage without heat will understand the importance of having a backup heating system.

Freestanding stoves can be placed in almost any room. They are vented with a Class A stainless steel chimney, or a masonry chimney with a stainless steel flue liner.  Fireplace inserts are installed in a masonry fireplace with a stainless steel flue liner.  Wood-burning fireplace inserts cannot be installed into a manufactured firebox. 

Hearthstone
freestanding stove


• Consumers buying highly efficient wood stoves will be able to claim a 26% tax credit that is uncapped and based on the full cost of the wood stove (including purchase AND installation)
  
  
• The 26% tax credit is valid from January 1, 2021 through December 31, 2022. In 2023, the tax credit will remain in effect for the entire year, but the percentage steps down to a 22% tax credit.
  
  
• Qualifying wood stoves must meet at least a 75% HHV efficiency value. Not all wood stoves qualify.
  
  
• You will claim your tax credit when you file your taxes on IRS form 5695 under “Residential Energy Efficient Property Credit “. You will need your purchase receipt (showing cost of product and installation). You will also need a  manufacturer certificate stating that the stove qualifies for the credit and is at least 75 percent efficient HHV. These are available on the manufacturer website. 

An inspection of the current chimney must be done prior to the installation of a wood-burning insert or stove using the chimney for venting purposes. It must also be cleaned to remove any creosote. The best time to have this done is in the spring or summer.

HearthMasters carries Regency, Hampton, and Hearthstone brands, which all have qualifying models. 

For more information visit www.chimkc.com. 

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Marge Padgitt is a chimney industry veteran. She is a CSIA Certified Chimney Sweep and NFI Woodburning Specialist. Marge is the President of HearthMasters, Inc. in Kansas City, Missouri. Reach her at hearthmastersboss@gmail.com.

Cut utility bills by using wood-heating appliances

Cut utility bills by using wood-heating appliances

One way to cut utility bills during cold weather is to use a wood-fired heating appliance such as a masonry heater, wood-burning stove, or wood-burning fireplace insert.

Masonry Heater by Gene Padgitt

Today’s modern wood-burning heating appliances are very efficient and clean-burning, unlike their older predecessors. The Environmental Protection Agency regulates wood stove emissions and has strict requirements that stove manufacturers must follow. This is why replacing an older, dirty burning wood stove is good not only for the environment, but less wood is needed to produce the same amount of heat.

Wood fuel costs can be significantly less than oil, gas, or electric heating appliances, especially if there is a nearby supply of inexpensive or free cordwood. For homeowners with their own land and trees, the concept of no cost for fuel other than physical exertion is very attractive. For those wanting to live off-grid, have an emergency heating alternative, or just lower fuel costs, the addition of a wood-burning appliance is a good solution.

Masonry heaters are arguably the best type of wood-burning appliance. They use old-world technology which is a series of channels installed inside the appliance that trap heat, then transfer the heat slowly through the mass of masonry. Masonry heaters are large and need to be centrally located for maximum benefit. The Masonry Heater Association of North America has more information on these efficient site-built appliances.

Hampton insert by Regency

Fireplace inserts are appliances that are installed inside an existing masonry fireplace. They use a small stainless steel flue liner and can be used either with or without a blower. By installing a new efficient wood-burning fireplace insert the fireplace efficiency will be increased by approximately 75%.

Freestanding wood-burning stoves

For more information on fuel cost calculators visit http://www.epa.gov/burnwise/woodstoves.html