IRS proposes using EPA database to verify 75% efficiency for tax credit

Industry is split three ways on question of eligibility.

July 2025 update: Congress revoked the wood heater tax credit as of Dec. 31 2025, ending what was meant to be a 10 year extension under President Biden. Expenses are eligible for stove purchases and installation of stoves prior to Dec, 31. 

Nov. 2024 - The IRS issued a proposed rule on October 25 to give guidance on how manufacturers can interpret“75% efficiency.” They are proposing to adopt the EPA database as the means of determining efficiency, which has been long expected by many in industry. 

The proposed rule is long-awaited by many who grew frustrated over the years that the IRS could not do what many felt was obvious: recognize the EPA efficiency listing. AGH was a prominent advocate for a uniform way to list efficiency as a way of protecting consumers, making a level playing field for manufacturers and instilling more faith in the industry. AGH often publicized exaggerated and misleading efficiency claims over the years.

Comments to this IRS notice are due by December 24, 2024 and a hearing is scheduled for January 21, 2025. The IRS notice can be found here.

Congress stipulated that biomass heaters at 75% efficiency, using the higher heating value, were eligible for a 30% tax credit, up to $2,000. However, Congress revoked that as of Dec. 31, 2025.

Most manufacturers were already using the efficiency numbers on the EPA database as the arbiter of which stoves or boilers were 75% efficient or higher. The EPA number is an average of the efficiencies on all the certification tests. But a few manufacturers chose to say their stoves qualified for the tax credit if any of the certification tests were 75% or higher.

The third faction, made up of masonry stove manufacturers, urged the IRS not to issue any further guidance, so that they could claim masonry stoves at 75% or higher could qualify even though they are not listed on the EPA database because they are not required to be EPA certified.

According to the Congressional Research Service, approximately 48,300 taxpayers claimed the biomass tax credit in 2023, making it the least likely tax credit that taxpayers claimed other than for home energy audits. There is no public data on how many biomass stoves and boilers were sold in recent years, but experts say that an average of 200,000 is plausible. EPA has the data but it is not organized or compiled.

Currently 67% of the 101 certified pellet stoves are 75% or higher, based on the EPA database figures and 45% of wood stoves are. However, 92% of cat and hybrid stoves are 75% or higher and only 15% of the 106 non-cat stoves on the market are 75% or higher.

The legacy of using efficiency to qualify for this tax credit, that started in 2008, raises many questions. Arguably, cleanliness is more important than efficiency when using wood, a renewable fuel that a substantial percent of Americans cut or collect on their own instead of purchasing it. The result is that stove manufacturers now focus more on efficiency, while sacrificing R&D to achieve incremental reductions of particulate matter. Congress controls the efficiency number, while EPA sets emissions levels, and a lower efficiency threshold could allow the EPA more leeway to set stricter emissions standards.

Most manufacturers did not submit comments on the proposed regulations. All comments can be found here. Among stove manufacturers, some manufacturers who make lower efficiency stoves (e.g. US Stoves) argued for the stricter definition of efficiency, while those making higher efficiency stoves (Hearth & Home Technologies) argued for a more lenient definition.

The comments by stakeholders outside the wood and pellet heating community provide an interesting snapshot into views on incentives for wood and pellet stoves and boilers. For instance, the American Lung Association does not support biomass stoves or boilers should be qualified energy property regardless of efficiency rating. The California Air Resources Board (CARB) and the Attorney Generals of MA, CO, DE, IL, ME, MD, MI, NJ, NY OR, RI and DC believe a full carbon lifecycle analysis should be done to better calculate an efficiency rating.

However, based on their comment and the sources in the footnotes, it appears that they are confusing biomass to electricity, rather than focusing on biomass heat. While this is a common mistake in the media, it is notable that whoever drafted this comment for these states also made it. Nevertheless, these states do not oppose the tax credit but argue that a stricter one could be better. No commentator suggested that only pellet heaters, that are consistently cleaner and more efficient, should receive the tax credit. A carbon life cycle analysis however, would most likely favor cordwood over pellets.

Support using EPA database

Alliance for Green Heat: The most reliable method to protect consumers, ensure that tax credits are
going to compliant models and create a level playing field for manufacturers is for Treasury/IRS to specify that eligibility is limited to units listed in the EPA Certified Wood Stove Database that have an overall weighted average efficiency of 75% or more using the higher heating value of the fuel. (AGH’s full comment can be found here.)

BPA, ACEEE, ASE: The most reliable method to protect consumers and to ensure that tax credits are going to compliant models is for Treasury/IRS to specify that eligibility is limited to units listed in the EPA Certified Wood Stove Database as having an overall efficiency of 75% or more using the higher heating value of fuel.

Blaze King: Our company has always viewed the overall efficiency to be the metric intended by the IRS as the qualifier for the 75% high heating value.

Travis: In the interest of efficiency and the preservation of resources, the IRS should rely on EPA’s database to confirm whether biomass stoves meet the 75 percent rating requirement.

US Stove Company: Therefore, for a biomass stove or boiler regulated by the EPA to qualify for the 25C credit, only the average “overall efficiency” is reported in the EPA Certification report should be recognized. In addition, this same efficiency number will be posted on the EPA Wood Heater Database, therefore easily verifiable. This will eliminate any question or “gaming” of the tax credit.

Support using any single test run

Hearth & Home Technologies: In our view, the Treasury Department and the IRS should issue guidance stating that biomass stoves meet the definition of "qualified energy property'' provided they have a "a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel as reflected in a single certified test run)." Providing this guidance will resolve the current uncertainty about how to meet the HHV requirement. By establishing the single test criteria, a greater number of biomass stoves could qualify for the tax credit, thereby giving consumers more affordable choices to replace noncertified heaters while burning an efficient renewable energy source.

Stove Builder International: Manufacturers should be able to qualify a property …provided this efficiency number is 75% or greater and can be found in the property’s test report. An efficiency number of 75% or greater should be obtained when the property is used at a combustion setting typically used by consumers. For instance, in the case of a wood stove, the products are typically used by consumers at the low setting. That is, consumers use their stoves in slow-combustion mode to get an “overnight burn”. The stove can be used at a higher setting, but this setting is normally recommended upon start-up only. The basis of their argument is that manufacturers will “make up any number they want.” This could not be farther from the truth. We don’t know where this paranoia comes from.

If the efficiency criteria do not offer enough flexibility and most non-catalytic wood stoves cannot qualify for the 25C tax credit, we feel that the IRS misses its objective of helping the middle class to switch to cleaner, more efficient biomass appliances.

Support current language without further guidance

Masonry Heater Association: the IRS not to issue guidance that conflates the regulations of different types of biomass heaters, potentially imposing the requirements of one category of biomass heater onto another category, for tax credit eligibility. For example, woodstoves must be on the EPA's certified list, EPA Wood Stove Database, to be legally installed; however, this is not a legal requirement of all categories of biomass heaters, e.g. masonry heaters. Masonry heaters are a category of biomass heating appliance that the EPA has chosen to defer regulating.

Tulikivi: we feel that guidance is not needed as the original text is clear enough and allows masonry heaters that meet the efficiency requirement to qualify for the tax credit despite not being on the EPA list of certified appliances

Support strict enforcement based on efficiency tiers

Comments Of The Attorneys General Of Massachusetts, Colorado, Delaware, Illinois, Maine, Maryland, Michigan, New Jersey, New York, Oregon, Rhode Island, And The District Of Columbia; The California Air Resources Board; And The Ramsey County, Minnesota, Attorney: With respect to Section 25C’s biomass provisions, we urge Treasury and the IRS to strictly enforce energy efficiency tiers to verify qualification for biomass stoves and boilers. Per British thermal unit (BTU), wood has about the same carbon content as coal, and, according to EPA, wood contains about 75% more CO2 per BTU than natural gas. As a result, wood that is harvested and burned for energy immediately increases greenhouse gas emissions—even where it is displacing fossil fuels. Biomass combustion also emits other harmful air pollutants, like particulate matter, which is connected to a multitude of adverse health consequences including premature death, cardiovascular effects, asthma, bronchitis, pneumonia, chronic obstructive pulmonary disease. To avoid inadvertently increasing greenhouse gas and other harmful pollutant emissions through biomass incentives, Treasury and the IRS should comprehensively evaluate lifecycle greenhouse gas emissions in calculating the efficiency rating of eligible biomass. If, however, Treasury and the IRS elect to rely on EPA wood stove certifications to demonstrate efficiency ratings, they should not allow certification based on test methods 125 and 127 (relying on ASTM 3053), which allow too much variability and manufacturer and laboratory manipulation.

Do not support including biomass heaters in the 25C tax credit

American Lung Association: The ALA recognizes that pollution from the combustion of wood and other biomass sources poses a significant threat to human health and supports measures to transition away from using these products for heat production. As such, we do not believe biomass stoves or boilers should be considered as part of a qualified energy property regardless of efficiency rating.

Other comments

Governor’s Office of NJ: Biomass stoves and boilers are a concern. It’s likely we would have difficulty supporting incentives for biomass but there may be cases that make sense.

Rewiring America: Treasury should structure the updated Form 5695 such that each product category (heat pumps for space heating/cooling, heat pump water heaters, biomass stoves, and biomass boilers) has its own line and can be tracked accordingly. This is crucial to track how many claims are filed for heat pumps and heat pump water heaters; otherwise, it would be impossible to distinguish between claims filed for heat pumps and biomass products.

AGH urges the IRS to issue guidance on wood heater eligibility for tax credits

Thank you for this opportunity to provide comments.  IRS guidance on wood heaters is long overdue.  The Alliance is an independent non-profit organization that strives to represent the interests of consumers of wood and pellet heaters.  We believe a tax credit for wood and pellet heaters is essential as we transition from fossil fuel to renewable fuels. 

The IRS asked whether guidance needed to define the term "thermal efficiency rating"? If so, what testing procedures should the Treasury Department and the IRS consider requiring or permitting to be used by manufacturers to measure thermal efficiency and demonstrate ratings that are valid for purposes of the § 25C credit?

 

Summary: The most reliable method to protect consumers, ensure that tax credits are going to compliant models and create a level playing field for manufacturers is for Treasury/IRS to specify that eligibility is limited to units listed in the EPA Certified Wood Stove Database that have an overall weighted average efficiency of 75% or more using the higher heating value of the fuel.  

 

Using the EPA database to determine eligibility is the most effective solution from a variety of public policy perspectives but it is not without problems: multiple test methods result in disparate EPA seasonal average efficiency results for wood and pellet boilers, which are not comparable, and which are not helpful for consumers or for the purposes of setting an efficiency threshold for the tax credit.  The EPA is aware of the problem but an impending change in IRS guidance on wood heater tax credits is likely to hurt members of the industry who sell some of the most sophisticated modern wood heating equipment.  We urge the IRS to consult with the EPA on this problem and find a solution as soon as possible.

 

In addition, we urge the IRS to make it clear that the $2,000 tax credit for wood heaters is in addition to the $1,200 for other 25C qualifying home projects, not instead of them. The IRS should clarify that the full $3,200 is available to taxpayers. We also urge the IRS to confirm that 25C tax credits are available to renters, not just to owners of residences, based on the removal of the term “owner” by Congress.

Finally, the IRS asked for comments on certification or other requirements for home energy auditors.  We urge the IRS to affirm that when energy auditors are directed to inspect HVAC systems, that wood and pellet heaters are recognized as legitimate heating devices and need to be inspected for safety based on nationally recognized criteria, just as other heating systems are.  Various agencies and institutions such as DOE, NREL and BPI have begun to address this problem but wood heater remain marginalized, leaving many older, self-installed units that pose fire hazards and are not being properly inspected.

Background on wood and pellet heater testing: There is universal acceptance among test labs and manufacturers that efficiency is measured using in accordance with CSA B415.1-10.  When stoves are tested for EPA certification, the traditional test is to use the EPA’s “Method 28” which consists of 4 burn rates, from low (Category 1) to high (Category 4).  The lowest burn rate allows the lowest amount of air to flow through the stove and typically produces a higher efficiency.  High burn rates allow maximum airflow through the stove, and typically produce lower efficiencies.  The labs then combine these 4 efficiency numbers and produce “a weighted average efficiency” which is what is recorded on the EPA database of certified heaters as “overall efficiency.”

CSA B415 produces three types of efficiency: Overall efficiency, combustion efficiency and thermal efficiency.  The EPA uses Overall Efficiency to get an Average Overall Efficiency” and EPA guidance on testing deficiencies makes no reference to “thermal efficiency.”  Even within the wood and pellet heater industry, there is confusion between the terms “overall efficiency,” “thermal efficiency” and “weighted average efficiency.” The image below is an representative example of how test labs report efficiencies.  

Each of the four burn rates produces an overall efficiency number, and combustion efficiency number and heat transfer, or thermal efficiency number.  The EPA averages the four overall heating efficiency numbers to get a weighted average efficiency.  In the EPA database, this weighted average efficiency is in the column titled “Overall efficiency- HHV.” (The EPA used to use the term “Actual measured efficiency CSA B415.1 after they stopped using default, estimated efficiencies in 2015.)

There are eight labs approved by the EPA to conduct certification testing, including one in Canada, Czech Republic, Denmark and Sweden.  The labs do not use efficiency terminology consistently, and often just refer to “efficiency” rather than “overall efficiency” or “weighted average efficiency” rather than “weighted average overall efficiency.” All labs clearly distinguish HHV and LHV, and no lab uses “thermal efficiency” in their weighted averages, as far as we know.

However, some manufacturers will use “Heat transfer efficiency” otherwise known as “thermal efficiency” numbers to qualify models for the tax credit because they tend to be 1-2% higher than “overall efficiency.” Thus, if a stove has an average overall efficiency of 75%, it could have a single burn rate as low as 69%, using thermal efficiency numbers.  No manufacturer uses combustion efficiency for purposes of the tax credit as far as we know.  Combustion efficiencies tend to be in the 96-98% range.

Wood heaters are tested by EPA approved labs and then the EPA uses the data in the report to certify the stove for sale. Once it’s certified the EPA puts summary data on its Database of certified wood heaters. Since 2015, the EPA has also required manufacturers to post the non-confidential parts of their lab test report on their website.  Those reports are public and you can find the efficiency numbers for each burn rate, but they are not easy for consumers to navigate. On the contrary, they are dense, full of fine, highly technical jargon and are only used by regulators and experts.

Statistics: Currently, 25 of the 31 central wood heaters are eligible for the tax credit, using the EPA list.  113 of the 262 room heaters are above 75%, using the EPA list.  Overall, that would make about half of all heaters eligible, if the IRS were to use the efficiencies listed on the EPA database.

Public policy considerations: To achieve a level of transparency for the consumer, using the EPA database of certified heaters is an obvious solution.  Some consumers care about efficiency and the only place that consumers can make side-to-side comparisons is on the EPA database.  With pellet stoves, efficiency typically matters more than wood stoves because unlike cordwood, all pellets must be purchased, and a more efficient stove can save consumers by using less fuel.

If the IRS wants to be more lenient with manufacturers and allow more than about half of heaters to qualify, it could keep allowing manufacturers to issue certificates without any guidance, or specifically say that if any burn rate achieves 75% efficiency or more, it can be eligible for the tax credit.  If the IRS specified this, we expect all manufacturers would quickly adopt this system and about 80% or more of appliances would be deemed eligible.

Public policy is also served by setting a level playing field for all manufacturers, instead of allowing some brands to undercut others by claiming their units are eligible for the tax credit when they are below 75% on the EPA database.  Almost all US manufactures now use the EPA database to determine if their models are eligible.  

By setting an efficiency threshold for wood heaters, certain types of wood heater benefit.  The Alliance for Green Heat has monitored the changes to efficiency in wood heater for more than 10 years and documented the various ways that manufacturers claim that their stoves are eligible for the tax credit.  The averages below were calculated several years ago, when efficiencies were lower but the conclusion is remains the same: hybrid wood stoves have on average, the highest efficiencies are virtually all of them qualify for the tax credit, under any definition.  More manufacturers are building hybrid stoves in order to qualify for the tax credit and whereas there were only 6 models several years ago, today there are at least 21. Non-catalytic stoves, the cheapest, most popular, and most basic stove, have the hardest time reaching 75% efficiency. Today, only 15 out of 113 non-catalytic models are 75% or over.

From a public policy perspective, setting a 75% efficiency minimum, using the EPA database of certified heaters, is positive in that it tends to favor stoves that emit fewer particulate matters (PM) emissions.  Non-catalytic stoves tend to have higher emissions both in the lab and in the hands of homeowners if other factors are equalized such as moisture content of wood and ability of the operator. Pellet stoves and hybrid stoves tend to the cleanest, as used by homeowners.

Many taxpayers want to be able to download a certificate of eligibility to keep in their files, and taking a screen shot of the EPA list may not be as easy or feel as secure. The owner’s manual of the stove almost always has the weighted average efficiency, so that can also serve as proof of eligibility for the taxpayer.

There are two classes of heaters that would be unfairly penalized by an IRS requirement to base eligibility off the efficiency numbers in the EPA database.  The first is that multiple test methods result in disparate EPA seasonal average efficiency results for some indoor wood and pellet boilers which are abnormally low and are not comparable to other boilers or helpful for consumers or for the purposes of setting an efficiency threshold for the tax credit.  The EPA is aware of the problem, as is NESCAUM and NYSDERDA who are involved in testing programs to try to identify the calculations and assumptions leading to this problem and then find a solution.

The second are Masonry heaters are also penalized but since they do not yet have a pathway to EPA certification, the solution is more complicated. There are consistent and reliable ways to test factory-built masonry heaters and those manufacturers could issue Certificates of eligibility for the tax credit, but they will not be listed on the EPA database.  Standard combustion chambers used in site-built masonry heaters could also be tested but this is more complicated.  The Masonry Heater Association is the point group on this issue.

IRS options

The IRS has several options, depending on what their goals are.  

 

1.     The first, and best option, in our opinion is to use the “overall efficiency” numbers listed on the EPA database of certified wood heaters be the sole arbiter and end the practice of using manufacturer certificates, or only allow manufactures to issue certificates for heater models that are listed at 75% efficiency or higher on the EPA database. Many of the benefits of this are discussed above in the public policy discussion.

 

2.     There is a hybrid option of allowing manufacturers to issue certificates of eligibility if a model exceeds is 75% efficient or over for stoves and outdoor boilers or furnaces, or is 75% or more overall efficiency on any of their burn rates for indoor boilers or furnaces. 

 

3.     There is the current system, where manufacturers self-issue a certificate to declare that a particular model is eligible, sometimes without any reference to efficiency figures or definitions. This has resulted in manufacturers claiming models with weighted average efficiencies as low as 64% to be eligible. This has also allowed manufacturers to claim units that are not EPA certified to be eligible without providing any efficiency data. Another weakness of this option is that there is no agency with the time, resources, or agility to provide enforcement in this area, leaving consumers vulnerable to false claims. 

 

On the following pages, we have included representative samples of four types of manufacture certificates of eligibility for the tax credit.  The disparity of the language used and the range of models that are claimed to be eligible for the credit show a clear need for more guidance for the IRS.

 

A. Example of a certificate that claims eligibility without reference to efficiency, even though it appears all units are above 75% efficiency based on the EPA database.

 

B. Example of a company that claims its units are eligible, even though they are well below 75% on the EPA list and do not meet 75% even on individual burn rates.

 

C. Example of EPA non-certified stoves without EPA approved third party lab efficiency data to claim eligibility.

 

D. Example of a certificate that claims models are eligible solely because they are “qualified energy property” with no reference to efficiency.

 

$300 wood heater tax credit extended through 2020

Dec. 28, 2020 - Congress passed legislating signed by President Trump that gives eligible wood heaters a 26% tax credit in 2021and 2022, reducing to 22% in 2023 and expiring on Dec. 31, 2023 unless its extended.  This far larger credit, under Section 25D of the tax code, puts an end to the smaller $300 credit that was under Section 25C.

This map shows which states historically
have the highest percent of residents
claiming the energy tax credits, including
the credit for wood and pellet stoves.

Dec. 19, 2019 - Congress passed spending package that retroactively extended the $300 tax credit for wood and pellet stoves and boilers back to Jan. 1, 2018 and through Dec. 31, 2020.  This is the third retroactive extension in five years, making the tax credit an ineffective tool for both businesses and consumers to drive purchases towards higher efficiency applianes.

Stoves must be 75% efficient or higher to be eligible.  Check the EPA database of wood heaters to determine eligibility.

In January 2018, President Trump signed into law a budget deal that included a one year, retroactive extension of the wood heater tax credit for 2017.

Two pieces of legislation in the House of Representatives (Green Act and HR 4506) in 2019 would have increased the tax credit to either $400 - or 30% of purchase and installation costs, that would be more than a $1,000 credit for most purchases in specialty hearth retailers and more than  a $5,000 credit for most whole house boiler and furnaces installs.  Both of those bills were opposed by oil and gas interests who are fighting to keep their markets and by President Trump, who dismisses the need for more rapid deployment of renewable energy sources.

The two bills that would have raised the amount of the tax credit also clarified the eligibility of stoves and boilers, saying that efficiency should be measured using the North American higher heater value (HHV) calculation.  This would close several loopholes used in the past by most of the stove and boiler industry that used a European calculation with lower heating values (LHV) and sometimes using internal or optimal testing, instead of the average efficiency calculated by approved third party labs.

The tax credit in the December 2019 spending package could leave room for the main industry association, the Hearth, Patio and Barbecue Assocation (HPBA) to advise their members that they can keep self-certifying which stoves are eligible for the 75% tax credit, even if that stove or boilers is listed below 75% efficiency on the EPA's list of certified stoves and boilers. The loophole works like many Washington loopholes in that until the IRS clamps down on entities abusing a tax credit, they keep doing it.  The common sense definition of "a thermal efficiency rating of at least 75 percent" as stipulated by Congress should refer to the North American system that is accepted by the EPA and other HVAC industries.

The Alliance for Green Heat urges consumers to check with the EPA's list of certified wood and pellet heaters to confirm the efficiency of a unit and not rely on written or verbal assurances by manufacturers or retailers.

The Alliance for Green Heat is also calling on HPBA and stove manufacturers to publicly support and abide by a policy of only recognizing the average, overall efficiency of stoves based on third party testing at an EPA approved lab. In the past, virtually every stove on the market claimed to be eligible for the 75% efficient tax credit and tens of thousands of consumers were misled and purchased far less efficient heaters.   The American Council for an Energy Efficiency Economy (ACEEE) has also called on Congress and the IRS to define and enforce the 75% efficiency eligibility limit.

AGH will update this blog as it becomes more clear which companies are self-certifying stoves at less than 75% efficiency.

For more background on the wood heater tax credit, click here.

The wood heater tax credit comes and goes

Labs now test wood and pellet stoves
for efficiency but some manufacturers
ignore those tests and tell consumers
their stove are 75% efficient and
thus qualify for the $300 tax credit.

Dec. 2020 -  The $300 wood heater tax credit was about to expire on Dec. 31, but it got extended in a big way.  In 2021 and 2022, high efficiency stoves and boilers will now get a 26% tax credit on purchase price and installation costs.  In 2023, the credit will drop to 22%.  Heaters must be 75% efficient or higher, based on the efficiency provided on the EPA list of certified heaters.   See more details here.

Dec. 2019 - A federal tax credit had not in been in place for wood or pellet heaters in 2018 and 2019, but in December of 2019 it was made retroactively available back to Jan. 1, 2019 and through Dec. 31, 2020.  Congress stated that stoves needed to be 75% efficient to qualify, but manufacturers have ignored that and claim that almost all stoves qualify.

The Green Act, released by House Democrats in 2018 would have given wood and pellet heaters that are 75% efficient or higher a 30% tax credit, just like solar.  A similar bill in 2019 came very close to passing but didn't.

Feb. 9, 2018 - Today President Trump signed into law a budget deal that included a one year, retroactive extension of the wood heater tax credit for 2017.  Thus, consumers who bought stoves that are presumptively 75% efficient or higher may qualify for a $300 tax credit on their 2017 taxes.  Stoves purchased in 2018 or 2019 are not covered.  Click here for more detail on the 2017 tax credit extension.

Nov. 18, 2016 - Republican leaders on Capitol Hill say they do not intend to consider a tax extenders bill, that could have extended the $300 tax credit for wood and pellet stoves into 2017.  Currently, that credit is set to expire on Dec. 31, 2016.  Next year, a tax reform package could revive a wood and pellet stove tax credit, and make it retroactive to Jan 1, 2016.

Renewable energy and energy efficiency incentives appear less likely under a Trump administration with both houses of Congress controlled by Republicans.  A $300 tax credit for stoves was not significant enough to really tip the scales for that many consumers, and when it did they were just as likely to buy a very low efficiency stove, due to misleading advertising by most stove manufacturers claiming that nearly all of their units are 75% efficient.  This loophole that industry created has diminished support for the stove tax credit among key energy efficiency groups and may reduce its chances of being included in a bill in 2017.

Dec. 18, 2015 - The United States Congress passed a massive omnibus spending bill to fund the government and provide tax breaks to businesses and individuals.  Among them is the $300 tax credit to purchase a wood heating appliance.  The bill extends that credit through Dec. 31, 2016 and is retroactive to Jan. 1, 2015.

In a far more widely anticipated move, Congress extended the 30% tax credit for residential solar PV panels through 2019 and then gradually reduce it.  This credit was set to expire at the end of 2016 and offers that industry a level of support and certainty for strong growth.

For wood and pellet heaters, the bill extends the $300 tax credit, contained in Section 25C of the IRS tax code, which states taxpayers are entitled to a $300 tax credit for the purchase of a wood or pellet heating appliance that is 75% efficient or greater.  Consumers need to obtain a certificate from the manufacturer, stating that the appliance is qualified for the credit.

For consumers who purchased a wood or pellet stove in 2015, or who will do so in 2016, they will likely be entitled to the $300 credit if they have not used up their $500 lifetime maximum credit for energy efficient property. 

Wood and pellet stove manufacturers routinely mislead the public by claiming that virtually every single stove they make is at least 75% efficient, flouting the letter and intent of the law, which was to only qualify stoves at 75% efficiency or higher. As of May 15, 2015 all stoves and boilers certified in the US are tested for efficiency using the CSA B415.1-10 efficiency test.  This efficiency test provides a guideline for how to test and not all stoves will achieve an efficiency of 75%.

“Higher efficiency wood and pellet heaters deserve renewable energy incentives to help American families reduce reliance on fossil fuels and to encourage companies to build higher efficiency appliances,” said John Ackerly, President of the Alliance for Green Heat, an organization that advocates for wood and pellet heating. “In the past, some in industry has made a mockery of this tax credit, misleading tens of thousands of consumers into thinking they are buying higher efficiency stoves.  Its time to start measuring efficiency and reporting it honestly and only qualifying those heaters that are 75% efficient or higher,” Ackerly said.

The Alliance for Green Heat estimates that a third of all wood and pellet stoves could meet the 75% efficiency threshold, giving consumers a wide range of choices.  Appliances that are 75% efficient using the European lower heater value (LHV) are usually between 69 – 71% efficient using the North American higher heating value (HHV).  A leading industry expert, Rick Curkeet concluded in a 2008 letter to an industry trade association that "the intent of the solid fuel appliance incentive program recently enacted by Congress is ... to require a minimum of 69.8% efficiency."

Stove manufacturers are now required to disclose their efficiency and more than a quarter of all EPA certified stoves now have actual, verified efficiencies posted on the list of EPA certified stoves,  A few stove companies, such as Blaze King, Jotul, Kuma, Seraph, Travis, Woodstock Soapstone publicly disclose actual efficiencies of most of their models on the EPA website and almost all of those models appear to qualify for the tax credit.  However, other manufacturers still list one efficiency with the EPA, but maintain another efficiency definition that allows them to claim their stoves are 75% efficient to qualify for the tax credit.

Unlike other heating and cooling appliances, prior to May 2015 wood and pellet heating appliances did not have to test or report efficiencies and there are still few accepted norms on advertising practices.  Websites and promotional materials of many major stove brands contain exaggerated efficiency claims, some of which may come from the company’s internal laboratory, not from a reputable, third party lab.  

4 Reasons Why Wood and Pellet Stove Efficiency Numbers are Unreliable

Updated: December, 2016

Confused about stove efficiencies?  You’re not alone.  Even most people in the industry are confused – or don’t want to really let consumers know what is going on.  Granted, it’s complicated and tough to explain stove efficiencies to people who are not experts, but stove manufacturers also have their own incentives for obfuscating what the numbers actually mean. Heating with wood and pellets can be an excellent way to affordably heat your home with a local, renewable fuel.  But the sooner the EPA requires manufacturers to disclose accurate efficiencies, the better it will be for consumers.

Here are 4 main reasons why stove efficiencies are unreliable:.

1. Unlike all other heating and cooling equipment that has third party-verified efficiencies, the EPA did not require that stove manufacturers report their tested efficiencies until May 2015.  Stoves tested after May 15, 2015 have to test for, and disclose, their efficiency, but most of stoves on the market were tested before that so they still do not have to disclose their efficiency. The result is that stove manufacturers routinely advertise efficiencies that are higher than their actual efficiency.

2. This confusion became even worse in 2009 when Congress and the IRS did not  preclude companies from self-certifying their efficiency using the European lower heat value (LHV).  Practically overnight, every manufacturer claimed that all their stoves were at least 75% efficient in order to qualify for the federal tax credit (which at that time was $1,500 then went to $300 and as of Dec. 31, 2016 its expired.)

3. Many pellet stoves have a history of very low efficiency. The EPA used to regulate particulate matter  in pellet stoves in a way that gave them an incentive to have a very high air to fuel.  All the old pellet stoves were grandfathered if they emitted less than 4.5 grams an hour.  Although most pellet stoves on the market today have efficiencies above 60%, there are some as low as 40 – 50%.  Even so, virtually all claim to be at least 75% for purposes of the federal tax credit.

4. Manufacturers have used a variety of different ways to test for efficiency and choose the way that makes their products look most efficient.  Moreover, they can do the testing in their own lab instead of having a reputable, third party lab do independent testing. 

That said, not all manufacturers exaggerate their numbers and most make reliable, good quality stoves.  But there is not a culture of transparency among stove manufacturers, but rather a culture that only discloses what is required by law to be disclosed.  There are 3 things consumers can do to protect themselves from purchasing an inefficient stove.

Buy a stove that reports its actual efficiency results to the EPA.  A handful of manufacturers have recently provided the EPA with third party-verified efficiency numbers, and we hope more will do so in the future.  As of December 2016, there are more than 125 stoves on the EPA’s list with third verified numbers using HHV.  The majority of these are wood stoves.  Few pellet stove manufacturers provide verified efficiency numbers.  Several companies now  provide verified efficiency numbers for all their stoves. For a list of the stoves, click here.  Generally, catalytic stoves are 5 – 10% higher efficiency than non-catalytic stoves and are much easier to keep a fire burning cleanly and efficiently overnight. 

 Keep in mind that with wood stoves, efficiency is not just a function of the stove, but also how the operator uses it.  Make sure to use seasoned wood that is under 20% moisture content to get the highest efficiency out of your stove. For pellet stoves, make sure to clean the stove once or twice a month and have a professional deep cleaning once a year. Otherwise, efficiency can drop significantly as pellet stoves get dirtier.

The Alliance for Green Heat is a non-profit consumer organzation that promotes cleaner and more efficient wood heating. For more information about us and our programs, click here.