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Wood Stove Tax Credit

All you need to know about the 2021 Wood and Pellet Heater Investment Tax Credit!

For over a decade, another tax credit under Sec. 25(C) of the tax code has provided a small incentive of $300. That credit is no longer in existence and has been replaced by this new tax credit, which covers 26 percent of the equipment AND installation costs (with no limit) in 2021 and 2022. The credit percentage is reduced to 22 percent in 2023. An excellent reason to make an energy-conscious purchase that improves the energy efficiency of your home.

 

How to qualify for the tax credit?

By purchasing the a qualified wood stove before December 31st, 2023.

 

How much will I save with this tax credit?

The biggest advantage of this tax credit is that it covers the cost of equipment, chimney, air distribution ducts and installation. This allows substantial savings on your new Heat Commander! For example, considering your project can easily reach $5,000, you could obtain a tax credit of approximately $1,300 ($5,000 x 26%) upon filing your 2021 tax return.

 

What information do I need to provide to claim my tax credit?

  1. Purchase receipt, including cost of equipment, venting components and installation labor.
  2. Manufacturers certificate stating that the furnace qualifies for the tax credit and is at least 75 percent efficient HHV.

 

How do I claim my tax credit?

  • File Via Tax Software: Located in the “credits” section of the Federal portion under home ownership and residential energy credit. 
  • Via U.S. This credit would be claimed on IRS form 5695 under "Residential Energy Efficient Property Credit.

 

I purchased a stove qualifying for last year’s tax credit, what do I need to do?

If you made a qualifying purchase and installation in a previous tax year, before January 1st, 2021, and you want to claim a credit, you will most likely have to file an amended return to claim the older Sec. 25(C) tax credit. The new Sec. 25(D) credit is not retroactive. It is only for purchases and installation made after December 31st, 2020. You can file an amended return for previous tax years using IRS form 1040X.