Save 26 percent off the purchase of a new Wood Stove or Insert
Effective January 1, 2021 a new Biomass tax credit under Sec 25(D) of the tax codes creates a tax credit of 26% off the purchase and installation cost of a new wood stove or insert (with no cap or lifetime limit) for tax years 2021 and 2022.
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- Effective Dates:The new tax credit under Sec. 25(D) of the U.S. Internal Revenue Code (“IRC” or “tax code”) will come into effect on January 1, 2021 for qualifying purchases and installations completed on or after that date, through December 31, 2022
- Credit Amount: Creates a new tax credit of 26 percent of the purchase and installation costs (with no cap or lifetime limit) for tax years 2021 and 2022;
- Qualifying Products: Require
qualifying products (any biomass-fueled heater) be at least 75 percent
efficient per the higher heating value (HHV) of the fuel
- Further IRS guidance on qualifying products will likely be provided in 2021
- In the meantime, the EPA certified wood heater database may be referenced
What happens to the 25(C) tax credit that expired on December 31, 2020?
- Eliminates the tax credit for biomass stoves under IRC Sec. 25(C) starting in 2021 and enacts this provision in its place
- Any product purchased in 2020 that qualifies for the new Sec. 25(D) credit, but isn't installed until 2021, can be claimed under the Sec. 25(D) credit on a 2021 tax return. Products must be claimed on the tax return year in which the product installation is complete.