New tax credits for 2021

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BKVP

Minister of Fire
That is a challenge. Some have been promised, but I am not sure when we are going to see them. For example, the Hearthstone Clydesdale hybrid is still mia, but claims high efficiency and says it qualifies on their website.

Add the Regency I1500 & I2500.
I know all the CEO's, so I can call them. I'm on the road next week in Missouri, so I can also check showrooms...thanks.
 

EbS-P

Minister of Fire
Jan 19, 2019
2,658
SE North Carolina
Is the only requirement that it has to have 75% efficiency? For example, the Osburn 3500 shows it is 77% but I couldn't find it on the list.
75% HHV. Look close at the 3500 specs for the HHV.
 

BKVP

Minister of Fire
The 25D Tax Credit should help to offset some of the added expense of whichever wood stove you purchase (so long as it qualifies). If you have Federal Tax liability, the 26% can be applied over two years if not used entirely on 2021 taxes.

IT SHOULD BE NOTED FOR ALL READING THIS...THE TAX CREDIT APPLIES TO THE YEAR IN WHICH THE INSTALLATION IS COMPLETED. DUE TO PRODUCT DEMAND ON ALL MANUFACTURERS AND PROXIMITY TO YEAR END, THIS WILL BE COULD BE AN ISSUE. THE 26% IS 2021 AND 2022. IT DROPS TO 22% FOR COMPLETED INSTALLATIONS IN 2023..
 

BKVP

Minister of Fire
HHV is all that counts...
 
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John Ackerly

Burning Hunk
The tax credit is slated to go UP to 30% IF the Build Back Better act passes. The bad news, is that it moves from Section 25D, back to 25C, which means it will remain a tax credit, and not be reimbursable, like solar panels will be under 25D. Its all up to Senator Joe Manchin at this point, and looking unlikely that the BBB Act will be voted on in 2021. So, if it passes in early or mid 2022, the 30% rate would likely take effect Jan. 1, 2023. And it will still cover installation, venting, floor protection etc. - anything that is essential to a safe installation.
 

71montess

New Member
Mar 27, 2021
64
Base camp
The tax credit is slated to go UP to 30% IF the Build Back Better act passes. The bad news, is that it moves from Section 25D, back to 25C, which means it will remain a tax credit, and not be reimbursable, like solar panels will be under 25D. Its all up to Senator Joe Manchin at this point, and looking unlikely that the BBB Act will be voted on in 2021. So, if it passes in early or mid 2022, the 30% rate would likely take effect Jan. 1, 2023. And it will still cover installation, venting, floor protection etc. - anything that is essential to a safe installation.
There are no free rides in Bidens BBB plan. As the plan is very controversial.
 
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BKVP

Minister of Fire
While an increase of 4% to the credit is great, going from 25D to 25C has two significant drawbacks.

Under 25C, the credit would not apply to any residence other than the primary residence. So if a consumer has second residence, such a cabin or beach home, the credit would not apply. So if these second homes have old smoke dragon wood heaters, they more than likely will remain in use.

Second drawback, under 25C, the credit will not allow for a carryover of any remaining credit to the next tax year. Being able to carryover credit balances into the next tax year to decrease tax liability is definitely a benefit, especially when folks replace old wood heaters in their primary and secondary homes.
 
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John Ackerly

Burning Hunk
For us, the most significant drawback is that the credit under 25C means it will remain exactly that - a tax credit - whereas products under 25D will be able operate more like a rebate, so households don't have to put all the money up front. This is a key provision if you want to reach lower income families, who are more likely to just self-install and not use the tax credit. For us, having the tax credit benefit families with second homes is not nearly as important.

Its ironic, because wood and pellet stoves are far more relevant to middle and lower-income families, compared to geothermal and solar PV, for example. The reason they remained in 25D and we got pushed back to 25C was purely economic: Congress needed to reduce the price tag of 25D and we have the weakest lobby compared to other renewable lobbies, so it was easiest to move us. There was no major effort to get back into 25D.
 

jwoair23

Feeling the Heat
Oct 2, 2011
285
Ohio
So I got my W2 and I am trying to complete the tax credit through TurboTax. When I enter the total cost (around $5K), it is saying the credit is capped at $300.

Now I will say it says I can't file until 2/2 because the tax form for this credit isnt ready yet from the IRS. When it is updated, will I then get the full 26% credit instead of the $300? It should not be capped at $300 correct?
 

stoveliker

Minister of Fire
Nov 17, 2019
4,518
Long Island NY
I think you are looking at the home energy efficiency update tax credit? If I remember correctly, that is capped at $300. $300 for this is ridiculous, given that most (all?) eligible stoves are north of $1200, and then labor and parts of installation can be added...

I have not heard that there was a cap for this one.
 

EbS-P

Minister of Fire
Jan 19, 2019
2,658
SE North Carolina
I think you are looking at the home energy efficiency update tax credit? If I remember correctly, that is capped at $300. $300 for this is ridiculous, given that most (all?) eligible stoves are north of $1200, and then labor and parts of installation can be added...

I have not heard that there was a cap for this one.
I believe 300 was the old credit not the new 25D credit (26% of install cost). From what I’ve read IRS is really backed up. Filing begins the 26th.
 
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jwoair23

Feeling the Heat
Oct 2, 2011
285
Ohio
I think you are looking at the home energy efficiency update tax credit? If I remember correctly, that is capped at $300. $300 for this is ridiculous, given that most (all?) eligible stoves are north of $1200, and then labor and parts of installation can be added...

I have not heard that there was a cap for this one.
Yes thats the category it was under, I can't seem to find the right category for this credit in TurboTax. Any idea where I can find it, if anywhere?
 

stoveliker

Minister of Fire
Nov 17, 2019
4,518
Long Island NY
If.the IRS form is not yet ready, then TurboTax won't be able to have you input the data for th credit as they can't process it yet.
 

jwoair23

Feeling the Heat
Oct 2, 2011
285
Ohio
If.the IRS form is not yet ready, then TurboTax won't be able to have you input the data for th credit as they can't process it yet.
That must be it, as even the help description says the biosmass is 26% and not capped, but then it only gives you $300. I'll have to check again in early February when the new form is on TurboTax.


The IRS defines energy-efficient building property as:

  • An electric heat pump water heater that yields an energy factor of at least 2.2 in the standard Department of Energy test procedure.
  • An electric heat pump that achieves the highest efficiency tier established by the Consortium for Energy Efficiency (CEE) as in effect on January 1, 2009.
  • A central air conditioner that achieves the highest efficiency tier that has been established by the CEE as in effect on January 1, 2009.
  • A natural gas, propane, or oil water heater that has an energy factor of at least 0.82 or a thermal efficiency of at least 90%.
  • An advanced main air circulating fan is an efficient fan, or blower motor which blows the air that your furnace heats up through the duct system and uses no more than 2% of the furnace’s total energy.
  • A biomass fuel stove used to heat your home (or water for your home) that has a thermal efficiency rating of at least 75%. Wood and wood pellets are considered biomass. For 2021, the credit isn't capped and covers 26% of the full cost (purchase and installation).
You can get 10% of the cost of energy-efficient building property or $300 (whichever is less) as a tax credit.
 
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stoveliker

Minister of Fire
Nov 17, 2019
4,518
Long Island NY
Yes, but the 10 pct (<$300) is for generic energy efficiency. After the form is ready, you should be able to get the 26 pct worked out. Good luck.
 

Parallax

Minister of Fire
Dec 2, 2013
867
Bellingham, WA
Spoke with a manager over at Pacific Energy today because I really like the Alderlea stoves but they don't qualify for the tax credit. Was told that they're working on it and hope to have it ready for testing by third quarter of this year. Then it has to get tested and approved so, realistically (this is my opinion, not the PE manager's), we might be looking at the 22% 2023 tax credit but it's still a significant enough savings (again, in my opinion) that it might be worth waiting.

I also asked if they were planning on introducing catalytic technology and was advised that they are not. That they don't believe in the use of catalysts because they are tempramental and tend to get clogged. Was relieved to hear that as I'm specifically wanting to avoid catalytic and hybrid stoves. Having spoken with the guy, I'm planning to wait it out. Thought I'd pass this info along in case it's helpful to anyone else.
 
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GoStove

New Member
Dec 6, 2021
5
USA
@Parallax glad I saw this thanks for sharing. Did they sound pretty serious about it? Was this for all their stoves (if you know) or just the Alderlea? I have been wanting to pick up a Summit (74%!) but a rebate would really help.
 

jwoair23

Feeling the Heat
Oct 2, 2011
285
Ohio
TurboTax has now updated their forms and has a line item for biomass stoves. I entered my full cost amount and received 26% back on the refund, so its working perfectly now!
 
Oct 15, 2020
162
New Hampshire
TurboTax has now updated their forms and has a line item for biomass stoves. I entered my full cost amount and received 26% back on the refund, so its working perfectly now!
Can I ask, is it a refund tax credit? Like it gets added right to the refund or does it work differently? For example my total install cost was around 25k, so I should get around $6,500 back. Is that just dumped into my refund and the government cuts me a check?
 

EbS-P

Minister of Fire
Jan 19, 2019
2,658
SE North Carolina
Can I ask, is it a refund tax credit? Like it gets added right to the refund or does it work differently? For example my total install cost was around 25k, so I should get around $6,500 back. Is that just dumped into my refund and the government cuts me a check?
My understanding is that’s is a credit to your tax bill but not refundable if you have no tax bill.

Edit I think it can be carried over to next year but don’t hold me to it.
 

jwoair23

Feeling the Heat
Oct 2, 2011
285
Ohio
My understanding is that’s is a credit to your tax bill but not refundable if you have no tax bill.

Edit I think it can be carried over to next year but don’t hold me to it.
This is my understanding as well.
 

velocity1

New Member
Dec 5, 2021
47
Connecticut
Hi All, for those of you wondering if the tax credit is only applied to offset what you owe (if you end up owing) and is not refundable (if you dont owe) for me I found that to not be correct. Year in year out our taxes are consistent, we always get money back. We use HR block and I added in the cost of the stove and install under the bio fuel credit. Once i was all done submitting it showed an additional refund of $1,500 so it does appear you can get money back in your pocket (refundable)
 
Oct 15, 2020
162
New Hampshire
Hi All, for those of you wondering if the tax credit is only applied to offset what you owe (if you end up owing) and is not refundable (if you dont owe) for me I found that to not be correct. Year in year out our taxes are consistent, we always get money back. We use HR block and I added in the cost of the stove and install under the bio fuel credit. Once i was all done submitting it showed an additional refund of $1,500 so it does appear you can get money back in your pocket (refundable)
So...I did my taxes and that sort of seems to be the case. Basically if you at least pay some taxes during the year you will get part of that back via this credit. For instance my boiler entitled me to around $6500 in tax credit. Say my wife and I owe at least $8000 a year in taxes. We pay in as much as possible out of our paycheck in hopes to cover that and get a refund.

Because we owed around $8000 and had a credit of $6500, our tax liability was $1500. Over the year we paid in much more than that from our paychecks so we essentially got back that $6500 as a refund....plus whatever other refund we were going to get.

If we only owed $1500 in taxes for the year and paid nothing in, or covered it fully, we would get back what we paid in due to the credit, and the leftover $5000 credit could be used for the following year.

This is my poorly worded understanding. I am by no means a tax professional.