2023 – 2032 Wood and Pellet Heater Investment Tax Credit (25C)

What is the Wood and Pellet Heater Investment Tax Credit?

High-efficiency biomass heating products qualify for a tax credit under Section 25(C) of the Internal Revenue Code (“IRC” or “tax code”). This 30 percent tax credit – capped at $2,000 – is available for appliances installed on or after January 1, 2023. CleanFire 300, 500, 700, 900 and Maxim M255 PE models qualify for the credit.

Homeowners that purchase and install a CleanFire or M255 PE model can claim the 30% tax credit, capped at $2,000, by using form 5695 when filing federal income taxes in the year the installation is completed.

Do I qualify for the Wood and Pellet Heater Investment Tax Credit?

Installation Date: To be eligible for the federal tax credit, install a qualifying WoodMaster outdoor furnace (currently the CleanFire 300, 500, 700 and 900, and the Maxim M255 PE are qualified) on or after January 1, 2023. The furnace must be claimed on the tax return year in which the installation is complete.

Qualifying Outdoor Furnace Criteria: The outdoor furnace must be at least 75% efficient per the higher heating value (HHV) of the fuel. The CleanFire 300, 500, 700 and 900, and the Maxim M255 PE all meet this requirement.

Residency Requirements: 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.

Does it matter if I pay upfront or finance my furnace?

It doesn’t matter if you pay for the furnace and installation upfront or finance your purchase. Master Financing is available at participating dealers with very attractive financing options for the furnace and installation. Either way, you’re eligible for the tax credit.

What is a federal tax credit?

A tax credit is a reduction of your federal income tax. If you had taxes withheld, you may get a refund. If you owe taxes, it may reduce what you owe.

How do I claim the Wood and Pellet Heater Investment Tax Credit?

The form you’ll need for filing for this credit is 5695. If you have questions or need help completing the form, contact your tax professional.

What paperwork do I need to keep for my tax record?

  • Keep your purchase receipt, including cost of products and installation.
  • Keep a copy of the 2023-2032 Manufacturer Certificate stating that the stove qualifies for the credit and is at least 75 percent efficient (HHV).

What expenses are eligible for the Wood and Pellet Heater Investment Tax Credit?

Both purchase and installation costs (e.g., piping and related materials, onsite labor) can be included in your total cost.

Disclaimer for 2023-2032 Wood and Pellet Heater Investment Tax Credit

This summary information is provided as a convenience and may not be relied upon as a substitute for professional tax advice. WoodMaster, Inc. is not a tax advisor. Taxpayers claiming a tax credit should consult a tax professional with any questions. WoodMaster is not responsible or liable for the taxpayer’s ability to receive tax credits.


2021 – 2022 Biomass Stove Tax Credit (25D)

What is the Biomass Stove Tax Credit?

The new Sec. 25(D) 26% tax credit is for qualified models and installation throughout 2021 and 2022. Currently, the CleanFire 300, 500, 700 and 900 models qualify for the credit. The Maxim 255 PE also qualifies.

What qualifies for the Biomass Stove Tax Credit?

  • Qualified furnaces must burn biomass as a fuel, heat air or water, and be at least 75 percent efficient per the higher heating value (HHV) of the fuel. The CleanFire 300, 500, 700, 900 and the Maxim 255 PE meet this requirement.
  • Must be installed between January 1, 2021 and December 31, 2022 to heat the taxpayers primary new or existing home.
  • Both purchase and installation costs (e.g. ThermoPEX, parts and accessories, onsite labor) can be included in your total cost.

Does it matter how I pay for my furnace?

It doesn’t matter if you pay for the furnace and installation upfront or finance your purchase. Master Financing is available at participating dealers with multiple financing options available to fit your financial needs. Either way, you are eligible for the tax credit.

What is a Tax Credit?

A tax credit is a dollar-for-dollar reduction of the federal income tax you owe. So, in order to qualify for the federal tax credit, you need to owe taxes to benefit. The Biomass Stove Tax Credit is a non-refundable personal tax credit which means it can only reduce or eliminate your liability (how much money you owe to the IRS).

Fortunately, the Biomass Stove Tax Credit allows homeowners to apply their tax credit over multiple years. If your tax owed is reduced to zero by this credit, but you still have money left to claim, it can be carried over to the next tax year to further reduce your tax burden in the future.

What paperwork should I keep for tax records?

  • Keep your purchase receipt, including cost of products and installation.
  • Keep a copy of the 2021-2022 Manufacturer Certificate stating that the stove qualifies for the credit and is at least 75 percent efficient (HHV).

How do I claim the Sec. 25(D) credit?

  • After you install your qualified WoodMaster outdoor furnace, claim the credit on your federal income tax form.
  • The form you will need to fill out for the IRS is 5695.

Disclaimer for the 2021 – 2022 Biomass Stove Tax Credit

This summary information is provided as a convenience and may not be relied upon as a substitute for professional tax advice. WoodMaster, Inc. is not a tax advisor. Taxpayers claiming a tax credit should consult a tax professional with any questions. WoodMaster is not responsible or liable for the taxpayer’s ability to receive tax credits.

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