The Tax Benefits of an Efficient Wood Stove or Insert
Many homeowners supplement their primary home heat source with a wood stove. Besides adding an instant, cozy atmosphere, a modern wood stove costs less to operate than a gas fireplace, and it’s extremely energy efficient. Wood stoves operate by burning compressed wood or biomass pellets to create heat. Biomass is an energy source derived from organic materials and a low-carbon fuel. In generating heat, a steady flame is produced and regulated by moving fuel from the storage container to the hopper to guarantee optimum efficiency. Not only can these stoves reduce your overall utility bill, but they can also lessen the use of fossil heating fuels that are damaging the environment. The chimney confidants at Hometown Hearth explain how we’ve been leveraging this program and what it means for you as the homeowner.
What Is the Wood Stove Tax Credit?
On December 28th, 2020, new legislation was signed into law—a 26% federal tax credit for wood stoves and wood stove installations complying with the Biomass Thermal Utilization. The new tax credit is under Section 25(D) of the US Internal Revenue Code. It came into effect on January 1st, 2021, and will last until December 31st, 2022, before it drops to 22% in 2023. Below we touch on the main points and explain which stoves qualify.
The wood stove tax credit began on January 1st, 2021, and states that if you purchase and install a wood or pellet stove with a Thermal Efficiency Rating of at least 75% or higher, you will be eligible to claim an uncapped credit based on the total cost of the stove, including purchase and installation. What makes a wood stove qualify for the 26% tax credit?
- The stove must meet the 2020 EPA standards
- 75% efficient wood stove or higher
- Must be purchased and installed in 2021 or 2022
You must claim your credit for the year your stove was installed. You can claim the credit on IRS Form 5695 under Residential Energy Efficient Property Credit. If you made a previous qualifying stove purchase and would like to receive a credit, you can file an amended return using IRS Form 1040-X. At Hometown Hearth, we can deliver top-notch chimney repairs required for a safe installation of these wood units so you can receive the uncapped tax credit. If you’re interested in buying a qualifying stove, you can search the Wood Stove Database, and our team would be happy to help with purchase and installation.
Why Choose Hometown Hearth for All Your Hearth and Chimney Product Needs?
For almost 30 years, the friendly chimney confidants of Hometown Hearth have provided customers across Philadelphia, Delaware, and Chester Counties with the highest quality hearth and chimney products, installation, repair, and restoration services. Whether you need help determining if you own a 75% efficient wood stove or are interested in learning if your current stove qualifies, our team is here to help. If you’re ready to enjoy the best wood fireplace and wood fireplace inserts installed by our team, contact us today at 610-833-1034 to get started.