A New Federal Tax Credit for Efficient Wood & Pellet Heating Appliances
Legislation became effective Jan 1, 2021 that created a new federal tax credit under Sec. 25(D) of the Internal Revenue Code. This new federal tax credit covers 26 percent of purchase AND installation costs (with no limit) on new wood and pellet heating appliances.
- Must be purchased and installed between January 1, 2021 and December 31, 2022 in a new or existing home (can be a primary or secondary home). The program continues in 2023, however the tax credit decreases from 26% to 22%.
- The stove or insert must burn biomass (wood or pellets) as a fuel 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.