Biomass Stove Tax Credit
Tax credits are powerful incentives for potentially hesitant consumers to invest in new biomass-fueled freestanding 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.
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.
HPBA continues to fight for another extension of this important incentive for consumers to invest in cleaner, more efficient technology.
Industry Specific FAQs
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 federal tax credit is an opportunity for the hearth industry to promote energy-conscious purchases to consumers 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. Manufacturers must provide documentation proving in some way that the appliance qualifies for the credit.
What Does the IRS Say?Energy-efficient building property (covered by this credit includes) a stove that uses the burning of biomass fuel to heat your home or heat water for your home that has a thermal efficiency rating of at least 75%.
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 a customer claimed this tax credit in past years, may they claim it again this year?
Yes, but only if they haven't reached the credit claim cap of $500. That said, if consumers are in your store looking to update their appliance, there may be stove accessories that you could recommend to enhance their experience (even if they aren't eligible for the tax credit).
What Does the IRS Say?If the total of any non-business energy property credits you have taken in the previous years (after 2015) is more than $500, you generally cannot take the credit.
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 the taxpayer's records.
Manufacturers should make this certification document available to consumers on their website, in the product packaging, or in some other easily accessible manner.
What Does the IRS Say?
For purposes of taking the credit, you can rely on a manufacturer’s certification in writing that a product is qualified residential energy property. Do not attach the certification to your return. Keep it for your records.