Claiming The 2025 Wood & Pellet Federal Tax Credit

The federal tax credit under Sec. 25(C) of the U.S. Internal Revenue Code was in effect from January 1, 2023 through December 31, 2025 for qualifying purchases and installations of biomass fueled residential home heating equipment. It offered a consumer tax credit of 30% of the purchase and installation costs (with a $2,000 annual cap with no lifetime limit) for tax years 2023 through 2025.

PLEASE NOTE: A tax credit is a reduction of your federal income tax. If you had taxes withheld, you may get a refund. If you owe taxes, it may reduce what you owe.

The IRS Energy Efficient Home Improvement tax credit expired on December 31, 2025.

Any qualifying purchases must have been completed, and the unit must have been fully installed, on or before December 31, 2025 in order to claim the 30% tax credit (up to $2,000).

To qualify, the stove or insert must burn wood or pellets (biomass), hot air or water, and be at least 75% efficient per the higher heating value (HHV) of the fuel.

Below, please find the full list of qualifying products that are carried at Higgins Energy Alternatives:

You can also reference the EPA-certified heaters list to find qualifying products (look at the column for “Overall Efficiency” for those products at 75% HHV or higher).

Taxpayers may claim the credit on their federal income tax return form in the year in which product installation is complete. The credit is a reduction of total income tax owed. This is a non-refundable tax credit available for individuals who pay federal taxes and who make energy-conscious purchases to improve the energy efficiency of their home.

If your tax owed is reduced to zero by this credit, but you still have money left to claim, then the balance cannot be carried over to the next tax year to further reduce your tax burden in the future.

You should always consult a tax professional as individual situations may vary.

• Paper Filing: The credit can be claimed on IRS Form 5695 on line 5, “Qualified biomass fuel property costs.” We have included links below for Form 5695 with Instructions below for your convenience.

• Electronic Filing: If you are using tax filing software, the credit generally will be found under the “Credits” section of the Federal portion (Home and Vehicles – Residential Energy Credit or Credit Carryforward). On H & R Block, the credit is not under “Residential Energy Credits;” it can be claimed under the “Alternative Energy Credit.” This is on the page after “Residential Energy Credits” after you indicate “No” when asked if you’ve made a purchase that qualifies for the “Residential Energy Credit.”

If you have questions or need help completing the form, contact your tax professional.

In order to claim the Energy Efficient Tax Credit when you file your 2025 taxes, you should retain:

1. Your sales receipt and any installation paperwork

The sales receipt and installation documentation demonstrates that you purchased and completed installation of the qualifying heater during the effective period of the credit. The retailer from whom you purchased the qualifying heater should also provide you with a manufacturer’s certification statement indicating that the product qualifies for the tax credit.

2. The manufacturer’s certification statement (if not available, documentation that the heater is at least 75 percent HHV efficient).

The certification statement should contain the name and address of the manufacturer; the class of qualified energy property; the make, model number and any other appropriate identifiers of the heater; a statement that the product is eligible; and a declaration, signed by a person currently authorized to bind the manufacturer in these matters (e.g., I attest that I have examined this certification statement, and to the best of my knowledge and belief, the facts are true, correct, and complete.). In the absence of a manufacturer’s certification statement, we recommend you print out or save the appliance manual section that mentions the efficiency rating, or take a screenshot of its listing on EPA’s website.

3. The Qualified Manufacturer ID Code

New for 2025, in order to claim the federal tax credit, all taxpayers must also provide the ID code for the qualified manufacturer by whom the eligible product was made. The list of Qualified Manufacturer ID Codes is below:

• Jotul: M8T2
• Hearth & Home / Forge ‘n Flame (Harman, Quadrafire, Vermont Castings, etc.): H1E1
• Hearthstone: W5N5
• Travis Industries (Lopi, Fireplace Xtrordinair): A6G1
• Blaze King: I1C0
• Enerzone: G3B8
• Woodmaster: R8Z4

Both the purchase cost of the product and installation costs are included. Sales tax can also be included. Always consult a tax professional for issue-specific guidance.

Installation costs cover expenditures for labor costs for on-site preparation, assembly, or original installation of the qualified heater. This also includes any venting/piping/wiring to connect the heater to the home.

For your convenience, we have included links to download the Official Manufacturer’s Certificates for each of our qualified manufacturers: