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 and fireplace
inserts. 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 a refund.
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 for standard
use, or bi-annually if used for continual heating purposes in order 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
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