Tax season is here. This is when the rubber meets the road (or when the flame meets the pellet). If you installed a pellet stove in 2024, now’s your time to shine!
Wondering why you get a tax credit for your wood pellet stove or how this credit first came about? You can find more details here.
Now that you’re all caught up, here’s how to file:
- Ensure your unit has a thermal efficiency of at least 75% per the higher heating value (HHV) of the stove.
- Fill out IRS Form 5695, the, Residential Energy Credits Part II, with your tax return.
- Claim the credit on line 29c, “Qualified biomass fuel property costs.”
- Include the cost of the stove and the cost of the professional installation.
- Remember, the 30% tax credit is capped at $2,000 annually, based on the full cost of the unit, including installation.
Keep in mind that the credit is non-refundable, so you won’t be owed money if your tax bill is less than the credit. This credit can be claimed annually on qualified home improvements through the end of 2032.
The credit for installation of a wood pellet stove falls under the Inflation Reduction Act, giving homeowners who make such improvements increased tax credit eligibility. This credit is in addition to the savings in monthly energy bills seen by wood stove users.
When filling out the applicable IRS Form 5695, consider whether you’ve made other eligible upgrades, including:
- Solar electric property
- Solar water property
- Small wind property
- Geothermal property
- Battery storage property
- Fuel cell property
