Important Clarification on Stove Tax Credit Subscribe to RSS feed
Federal tax credit for residential biomass appliances is a full $300, not 10% up to $300
Alliance for Green Heat, February 7, 2013 - The Hearth, Patio & Barbecue Association, Alliance for Green Heat and scores of other institutions and stove manufacturers have been incorrectly stating that the Internal Revenue Service (IRS) provides a 10% tax credit up to $300 for qualified biomass heaters.
In fact, the IRS provides a tax credit equal to expenditures up to $300 for qualified stoves. This means every qualified stove purchase will receive the full $300 unless the taxpayer already claimed a similar credit of $500 in a previous year.
The confusion arose because one set of energy efficiency improvements under 25C of the tax code are only entitled to a 10% credit up to a set amount. However, taxpayers who purchase biomass stoves are eligible under 25C(a)(2), which provides that qualified residential energy-efficient property may be eligible for a tax credit equal to the full cost of the equipment up to a set amount, which is $300 for biomass stoves.
Taxpayers filing with companies such as Turbo Tax, H&R Block or other tax preparation software should receive the full $300. While the error of stipulating that only a 10% tax credit is widespread among hearth retailers, manufacturers and others, it is unlikely that any professional tax preparation software would calculate the credit incorrectly.
The difference to taxpayers is substantial. For example, a $1,500 stove would only allow for a $150 credit, if the 10% provision applied. Click here for a copy of IRS form 5695 to claim the tax credit. A biomass stove purchase would be claimed in line 24 of form 5695.