26% Federal Tax Credit Wood Stove Changeout & Incentive Program
A wood stove changeout program is a voluntary program initiated at the local, state or regional level that provides eligible communities incentives to positively impact air quality. Residents can receive this rebate when they replace their old appliance, with a newer, more efficient wood/pellet stove or fireplace.
What is this new tax credit 25(D)?
Effective Dates: The new tax credit under Sec. 25(D) of the U.S. Internal Revenue Code (“IRC” or “tax code”) will come into effect on January 1, 2021 for qualifying purchases and installations completed on or after that date, through December 31, 2023.
Credit Amount: Creates a new tax credit of 26 percent of the purchase and installation costs (with no cap or lifetime limit) for tax years 2021 and 2022; moves down to 22 percent of purchase and installation costs in 2023 (under Sec. 25(D) of the U.S. tax code).
Qualifying Products: Requires qualifying products (any biomass-fueled heater) to be at least 75-percent efficient per the higher heating value (HHV) of the fuel. Further IRS guidance on qualifying products will likely come in 2021