Tuesday, December 23, 2014

How to claim the $300 stove tax credit

President Obama signed into a law a package of tax credits including the one for wood and pellet stoves.  The stove credit is for $300 for stoves purchased between Jan. 1, 2015 and Dec. 31 2016.

To take the credit, taxpayers need to use IRS Form 5695. A biomass stove purchase would be claimed in line 22a of form 5695. The form can be confusing because it never specifies biomass heating equipment, even though its included in the tax break.  Taxpayers do not have submit receipts with their taxes.  They just have to keep the sales receipt and the declaration from the manufacturer stating the stove is eligible, in their records.

There is a $500 limit is a lifetime limit for all energy efficiency property, including insulation, doors,
windows or other wood or pellet stoves. So, if a taxpayer has claimed $300 in previous years, for example, they could only claim $200 on the 2015 taxes for a qualifying stove.

The tax credit can also apply to wood and pellet boilers. Of the certified outdoor wood and pellet boilers on the list, not all will qualify for the tax credit. Heaters must be 75% efficient to qualify for the tax credit.  The EPA list uses HHV values and anything on the EPA list that is under 68% efficiency HHV, is not likely to be 75% LHV. If a manufacturer, claims a unit on this list qualifies for the tax credit, but is listed at 68% or lower, you may want to contact the EPA to confirm that the unit qualifies.   For more on this topic, click here.

Other heating and cooling equipment had far stricter qualification standards to ensure that consumers got a tax credit for a genuinely more efficient appliance or item.  With pellet stoves especially, consumers could have bought a 55% efficient stove, but calculated their fuel savings at 75%, based on manufacturers assurances. Experts believe that 75% (LHV) may be about the average efficiency of a wood or pellet stove.  Despite claims from industry and many other source, pellet stoves are not necessarily any more efficient than wood stoves.  

Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization (AFUE) rate of 95 or greater: $150

Split system air source heat pump that meets or exceeds 15 SEER/12.5 EER/8.5 HSPF: $300

Split system central air conditioner that meets or exceeds 16 SEER and 13 EER: $300

Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300

Electric heat pump water heater with an energy factor (EF) of at least 2.0: $300

The 2014 tax break cost taxpayers about $42 billion.  The tax credit for stoves alone is not likely to cost more than $50 million and that’s if a majority of people who bought stoves learn about the credit and take it on their tax return.


  1. Thank you, thank you. Might not have figured out, or understood about woodstove credit w/o you!

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