What is this new tax credit?

• Effective Dates: The new tax credit under Sec. 25(D) of the U.S. Internal Revenue Code (“IRC” or “tax code”) is in effect from January 1, 2021 for qualifying purchases and installations completed on or after that date, through December 31, 2023.
• Credit Amount: Creates a new tax credit of 26 percent of the purchase and installation costs (including Labor) for 2021 and 2022 dropping to 22% for 2023 (with no cap or lifetime limit) under Sec. 25D of the U.S. tax code.
• Qualifying Products: Any biomass-fueled heater (wood stove, wood insert, pellet stove or pellet insert) and is 75 percent efficient per the higher heating value (HHV) of the fuel.
• Any product ordered in 2020 that qualifies for the new Sec. 25(D) credit, but isn’t installed and paid for until 2021, can be claimed under the Sec. 25(D) credit on a 2021 tax return. Products may be claimed on the tax return year in which the purchase of the product and installation is complete.
• Please consult with your Tax Adviser to confirm your eligibility for this Tax Credit.

What qualifies?

• Purchased and installed between January 1, 2021 and December 31, 2023 in a new or existing home (primary or secondary home)
• The wood heater burns biomass as a fuel, heats air or water, and is at least 75 percent efficient per the higher heating value (HHV) of the fuel
• Both purchase and installation costs (venting and related materials; onsite labor) can be included in your total cost

What paperwork you should keep for tax records

• Purchase receipt, including cost of product and installation
• The manufacturer certificate stating that the stove qualifies for the credit and is at least 75 percent efficient HHV

What models qualify?