For more than a decade, Section 25(C) of the tax code provided a $300 tax credit for purchasers of fuel-efficient heating systems.
In December of 2020, a spending bill and a pandemic relief package was signed into law that included a new tax credit for efficient heating systems that is substantially more lucrative for homeowners. Now the tax credit offered is 30% of the total cost of purchasing and installing your fuel-efficient heating unit!
Additionally, fuel-efficient wood and wood pellet-based heating systems were added to qualify for this renewable energy investment tax credit, just like the wind, solar, fuel cell, and geothermal systems that have qualified for similar incentives in the past.
What does this mean for you as a homeowner?
Well, it means that if you are considering buying a highly efficient wood or pellet stove or biomass heating system this year, you should be able to claim a 30% tax credit all the way up to $2,000 based on the cost to purchase and install your unit. The $2,000 is an annual cap with no lifetime limit for tax years 2023 through 2032.
Qualifications are as follows:
- Your wood heater must burn biomass as a fuel, heating air or water, and be at least 75 percent efficient HHV(higher heating value).
- Must be purchased and installed between January 1, 2023 and December 31, 2023 in your primary residence.
- Must have Receipts for your total cost of purchase, installation, labor, and materials (including venting).