If you're considering upgrading to a high-efficiency wood or pellet stove, now is the perfect time. Thanks to a federal tax credit, you can save 30% on the total cost — including purchase and installation — up to $2,000 per year. This incentive is part of the Energy Efficient Home Improvement Credit, effective through December 31, 2025.
What Is the Tax Credit?
Under Section 25C of the Internal Revenue Code, homeowners can claim a 30% tax credit on the purchase and installation of qualifying biomass heating systems. This includes wood stoves, pellet stoves, and biomass boilers that meet specific efficiency standards.
Credit Amount: 30% of the total cost
Annual Cap: Up to $2,000 per year
Eligibility Period: Purchases made between January 1, 2023, and December 31, 2025
No Lifetime Limit: You can claim the credit each year you make qualifying purchases
What Makes a Stove Eligible?
To qualify for the tax credit, the stove must:
Have a thermal efficiency of at least 75% (measured by the Higher Heating Value, HHV)
Be installed in your primary residence
Be purchased and installed within the eligible dates
It's important to note that the stove must be EPA-certified and listed in the EPA database of certified wood heaters. Always check the manufacturer's specifications to ensure eligibility.
What Costs Are Covered?
The tax credit applies to the full cost of the stove, including:
The unit itself
Installation labor
Venting and chimney systems
Other associated equipment
This comprehensive coverage can significantly reduce the upfront investment in a new heating system.
How to Claim the Credit
To claim the tax credit:
Complete IRS Form 5695: This form is used to report residential energy credits.
Attach to Your Tax Return: Submit the completed form with your annual tax filing.
Keep Documentation: Retain receipts and manufacturer certifications for your records.
It's advisable to consult with a tax professional to ensure you're maximizing your benefits and complying with all requirements.
Don't Wait — Act Before December 31, 2025
This tax credit is set to expire on December 31, 2025. If you've been considering a stove upgrade, now is the time to act. Not only will you enhance your home's comfort and efficiency, but you'll also benefit from significant financial savings.