Biomass Stove Credit

[Mike Polacek]

2022 provides for a 26% tax credit for a biomass stove to include costs of purchase and installation.  Form 5695 caps a credit at $300 but the credit, created in 2021 allows for up to 26% of the total cost.  I can't find a form that allows for this credit.

[Just-Lisa-Now-]

I havent even looked at this form yet, but are you sure youre inputting it on the correct line of the 5695?

[Mike Polacek]

I cannot find a line anywhere that allows for the 26% credit.  The top part of the form as a biomass line as part of geothermal that gives 30% credit.  Everything else below is capped per item with the $500 lifetime limit.   The credit is supposed to be 26% uncapped.

[Just-Lisa-Now-]

looks like the form isnt updated correctly then, yes it should be 26%  @Anonymous  this needs to be addressed

Biomass stoves burn biomass fuel to heat a home or heat water. Biomass fuel includes agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including acquating plants), grasses, residues, and fibers.

**New for 2021:

Beginning in 2021, if you purchase and install a wood or pellet stove or larger residential biomass heating system with a Thermal Efficiency Rating of at least 75%, you will be able to claim a credit that is uncapped and based on the full cost (purchase and installation) of the unit, in the amount of:

• 26% for systems placed in service between 01/01/2021 through 12/31/2022
• 22% for systems placed in service between 01/01/2023 and 12/31/2023.

The credit must be claimed on the tax return for the year the product installation is completed. 

https://www.energystar.gov/about/federal_tax_credits/federal_tax_credit_archives/2022_tax_credit_information

[Just-Lisa-Now-]

Oh, but wait, they changed it for 2023...its 30% for 2023, isnt it?   Maybe something for 2022 was changed as ell and they didnt update the website?

https://www.energystar.gov/about/federal_tax_credits/biomass_stoves

This tax credit is effective for products purchased and installed between January 1, 2023, and December 31, 2032.

You can claim:

30%

of project cost

$2,000

maximum amount
credited

What products are eligible?

Biomass stoves burn biomass fuel to heat a home or heat water. Biomass fuel includes agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including acquating plants), grasses, residues, and fibers.

[Mike Polacek]

The Inflation Reduction Act increased the credit for projects beginning 2023 back to 30%.  I haven't seen anything that suggests it was backdated to 2022 projects. 

[Mike Polacek]

Tax Credit | Biomass | Stove | Initiatives | HPBA

[Just-Lisa-Now-]

This is a paragraph in my current 2022 edition of The Tax Book, its under biomass fuel expenditures...I hate when they futz around with stuff late in the year!

[Just-Lisa-Now-]

heres the whole page

[TaxGuyBill]

It goes on line 5.  It is 30%.

For 2022, the Biomass credit is still part of Section 25D.  The law retroactively changed 25D to 30% for 2022.

For 2023, the Biomass credit moves to Section 25C (it was NOT retroactively moved to 25C, so it is still part of 25D for 2022), and follows some slightly different rules.

[BobKamman]

Isn't it a tax credit starting in 2023?

[Anonymous]

@Just-Lisa-Now- @TaxGuyBill 
Are you seeing 30% calculating correctly? If not, please let me know so I can share. 

[deb4]

5695 PAGE 1

[Just-Lisa-Now-]

Yes, I tagged you too early in the thread, sorry!  They changed the law late in the year, looks like most websites arent updated, The Tax Book had current info.

[Mike Polacek]

Thank you.  I had found a couple places mentioning 30% for 2022 and so many more saying not until 2023.  Couldn't find a definitive answer.  30% it is. 

[Mike Polacek]

the credit at 30% is calculating properly.... line 5 biomass.

[MOAE]

It looks like for 2022 the credit is still for primary residence.  Then it looks like for 2023 that changes to any residence. Does that make sense? 

Also by any residence, does that mean rental property....

[TaxGuyBill]

---

@MOAE wrote:

It looks like for 2022 the credit is still for primary residence.  Then it looks like for 2023 that changes to any residence. Does that make sense? 

Also by any residence, does that mean rental property....

---

Yes, it changes to any personal-use residence.

Rentals fall under the ITC on Form 3468, but I'm not familiar with the biomass credit on that form or the fine details on how the new laws affect that business credit.  But it may be in the Instructions.