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Tax Credit for Hearthstone Products

What is a Biomass-Burning Stove Tax Credit? 

This federal tax credit encourages people to make energy-conscious purchases that improve the energy efficiency of their home. It is an up to $300 credit for buying a qualifying biomass-burning stove between January 1, 2015 and December 31, 2016. Biomass simply means the stove uses wood or pellet fuel.

Consumers claim the credit on their federal income tax form at the end of the year. This credit reduces the amount of tax you owe.  The credit is a reduction of total income tax at the bottom of your return, up to $300.  This tax credit is a non-refundable tax credit available for individuals who pay taxes and who make energy-conscious purchases to improve the energy efficiency of their home.

What is the difference between a tax deduction and a tax credit?

Deduction is an expense or amount you can subtract from your taxable income. A tax credit lowers your actual tax bill dollar-for-dollar, in this case by up to $300. In general, a tax credit is more valuable than a similar tax deduction.

What is the difference between a non-refundable tax credit and refundable tax credit?

A non-refundable tax credit (such as this one) is a tax credit that is applied to the amount of tax owed by the taxpayer after all deductions are made from his or her taxable income.  Typically, a tax credit only reduces an individual's tax liability to zero. Refundable credits can be considered the same as a payment, with no limit to the amount a taxpayer can receive. A refundable tax credit is a tax credit that is not limited by the amount of an individual's tax liability.

When does this tax credit go into effect and how long will it last?

The tax credit for qualifying biomass stoves has been extended and is valid only for the purchase of a qualifying biomass made between January 1, 2015 and December 31, 2016.  The maximum lifetime limit for the tax credit (for all residential energy property expenditures) is $300.  The sales receipt must indicate a covered date of purchase.

How is the value of this tax credit determined?

When you buy a qualifying biomass-burning appliance, you get a dollar-for-dollar tax credit of up to $300. 

What appliances qualify for the tax credit?

Any wood- or pellet-burning stove that meets the 75% efficiency rating qualifies for this credit. 
How do I ensure that I can collect on my tax credit?

Save your receipt that proves you purchased the qualifying appliance between January 1, 2015 and December 31, 2016.  You'll also need a manufacturer's certification statement that states your product meets the 75% efficiency rating needed to qualify for this tax credit.

Are installation costs included in this tax credit?

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove. The IRS is silent on the possible need to replace a chimney when upgrading an existing biomass stove; however, the EPA has a section on its website titled, Installation Affects Efficiency, which retailers and consumers should consult when deciding if a chimney replacement is warranted when installing a biomass stove.

Does the stove need to be manufactured in the U.S. to qualify for the credit?

No. There is no "Buy America" component to this tax credit.

Where can I find more information about this tax credit?

More information on the tax credit can be found HERE  . 


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