The Federal 26% Home Heating Tax Credit

Save 26% on Your Stove Purchase
26% Off

As of January 1, 2021, you can receive a 22-26% tax credit when you purchase a qualifying wood or pellet stove in 2021, 2022, or 2023. You can see big savings on a new, efficient stove and warm your home for less.

On December 28, 2020, President Trump signed into law a new legislation which creates an Investment Tax Credit (ITC) for home heating equipment in 2021. The new tax credit was just passed into law under Sec. 25(D) of the U.S. Tax Code.

So, what does that mean for you? When you buy a wood or pellet stove before December 31, 2023, you get additional money back on your tax return from your purchase. For example, if you purchase a pellet stove that costs $4,000 in 2021, you will realize a savings of over $1,000 once the credit is applied to your 2021 tax return!

What is it?

  • The new ITC is a 26% tax credit for home heating and hot water systems. The savings from your purchase are returned to you in your federal tax return.
  • The 26% tax credit starts on January 1, 2021 and will expire on December 31, 2022. In 2023, the tax credit decreases to 22%. The 25D tax credit expires after 12/31/2023.
  • The 25D tax credit will replace the old $300 biomass federal tax credit from Section 25(C) of the U.S. Tax Code that expired on December 31, 2020.

How does it work?

To be eligible for the 25D tax credit, the home heating or hot water system purchased must:

  • Utilize biomass fuel, such as wood pellets, wood chips, or cordwood.
  • Run at 75% efficiency heating value or higher.
  • Be purchased between January 1, 2021 and December 31, 2023.

The tax credit is applied toward the total purchase and installation cost of your new or upgraded home heating system on your tax form.

How can I claim it?

  1. Purchase a qualifying wood or pellet stove that meets the efficiency and biomass standards. You must be a homeowner and file your taxes to receive the tax credit savings.
  2. You will receive a document and receipt from your purchase. Retain the receipts from your purchase as well as the manufacturer certificate stating the stove qualifications. We can provide you with a copy of the manufacturer certificate, or you can find them on the manufacturer’s website.
  3. Claim the credit on your federal income tax form on your next year’s taxes and see the savings in your tax return!

Are you ready to save up to $1000 or more on your stove purchase?

At Higgins, you can save money and heat your home with the best brands on the market. Our top-name brands for pellet stoves and wood stoves meet the criteria for the tax credit to make your home cleaner, more efficient, and warmer. Plus, our professional sales team has all the information about the tax credit you need, and we are here to help. Give us a call or text at 978-355-6343 to get started or learn more!

The efforts to pass this bill were led by the Biomass Thermal Energy Council along with the aid and resources from the Alliance for Green Heat. To learn more, here are a few resources with more information about the new tax credit:

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