2021 – 2023 BIOMASS STOVE TAX CREDIT (25D)
WHAT IS THE BIOMASS STOVE TAX CREDIT?
The new Sec. 25(D) tax credit is for qualified models and installation and is at 26% throughout 2021 and 2022 before decreasing to 22% in 2023. Currently, Central Boiler Classic Edge 360, 560 and 760 HDX models qualify for the credit.
Homeowners who purchase and install a qualifying Classic Edge HDX model can get the tax credit simply by filling out a form declaring the amount you spent when you file your federal income taxes. As long as your system is installed by the end of 2022, you can claim the 26% from your federal income taxes.
DO I QUALIFY FOR THE BIOMASS STOVE TAX CREDIT?
Installation Date: To be eligible for the federal tax credit, install a qualifying Central Boiler outdoor wood furnace (currently the Classic Edge 360, 560 and 760 are qualified) between January 1, 2021 and December 31, 2023. The furnace must be claimed on the tax return year in which the installation is complete.
Qualifying Outdoor Furnace Criteria: The outdoor furnace must be at least 75% efficient per the higher heating value (HHV) of the fuel. The Classic Edge 360, 560 and 760 all meet this requirement.
Residency Requirements: The tax credit for energy efficiency is available for improvements made to a home that you own and use as your “principal residence.” This is the home where you live most of the time.
DOES IT MATTER HOW I PAY FOR MY FURNACE?
It doesn’t matter if you pay for the furnace and installation up front or finance your purchase. Central Financing is available at participating dealers with very attractive financing options for the furnace and installation. Either way, you’re eligible for the tax credit.
WHAT IS A TAX CREDIT?
A tax credit is a dollar-for-dollar reduction of the federal income tax you owe. So in order to qualify for the federal tax credit, you need to owe taxes to benefit. The Biomass Stove Tax Credit is a non-refundable personal tax credit which means it can only reduce or eliminate your liability (how much money you owe to the IRS).
Fortunately, the Biomass Stove Tax Credit allows homeowners to apply their tax credit over multiple years. If your tax burden in 2021 is less than the full amount of your credit, you can carry over the remainder when filing your taxes in 2022.
HOW DO I CLAIM THE BIOMASS TAX CREDIT?
After you’ve had your qualifying Central Boiler outdoor furnace installed, simply fill out an additional form when it’s time to file your federal income taxes. The form you’ll need to fill out for the IRS is 5695. If you have questions or need help completing the form, contact your tax professional.
WHAT PAPERWORK SHOULD I KEEP FOR MY TAX RECORD?
Keep your purchase receipt(s), including the cost of the furnace and installation. You should also have a copy of the 2021-2023 Manufacturer’s Certification Statement stating the the outdoor furnace qualifies for the credit and is at least 75% efficient (HHV). You can download the statement at CentralBoiler.com. You don’t need to send these with your tax return.
WHAT EXPENSES ARE ELIGIBLE FOR THE FEDERAL BIOMASS STOVE TAX CREDIT?
Both purchase and installation costs (e.g., piping and related materials, onsite labor) can be included in your total cost.
This summary information is provided as a convenience and may not be relied upon as a substitute for professional tax advice. Central Boiler, Inc. is not a tax advisor. Taxpayers claiming a tax credit should consult a tax professional with any questions. Central Boiler is not responsible or liable for the taxpayer's ability to receive tax credits.
NOTE: THE $300 BIOMASS STOVE TAX CREDIT (25C) EXPIRED 12/31/2020
This credit was extended until the end of 2020 using the same language used for years -- must be at least 75% efficient. It covers qualifying products purchased since the credit expired (December 31, 2017) and until the current credit expires on December 31, 2020. This was a retroactive extension. If you purchased a qualifying product in 2018, you can file an amended return. If you purchased a qualifying product in 2019, it can be claimed on your 2019 return.
How to Qualify for the $300 Tax Credit
- Purchase and place in service a qualifying Central Boiler outdoor furnace between December 31, 2017 and December 31, 2020.
- Save the purchase receipt and the manufacturer's certification statement for the furnace purchased.
- 2020 Manufacturer's Certification Statement.
- Claim the tax credit associated with your qualifying purchase on your federal filing for the tax year.
Details of the Tax Credit
- Tax credit is 10% of the amount paid for the qualifying product (installation costs cannot be included) up to a maximum of $300.
- The credit applies to the homeowner's primary residence only.
- A tax credit is a dollar-for-dollar reduction subtracted from your tax liability. Therefore, $300 can be subtracted directly from the amount of tax that is owed, or added to a tax refund.