There are a whole host of new tax credits to try to convert the economy from fossil fuels in the Inflation Reduction Act. Does anyone know how this impacts current tax credits on wood stoves (or extends them or creates new ones)?
New Tax Credits for Wood Stoves under Inflation Reduction Act?
- Thread starter Parallax
- Start date
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EbS-P
Minister of Fire
I sent an email to John, but in the meantime, I searched the bill for all mentions of wood stoves. There were just a few.
Parallax - Update: Although a quick search for wood stove didn't show a change, it looks like the tax credit for wood stoves has been expanded and extended. Apparently it's under bio-mass heater.
"This “residential clean energy credit” extends and enhances an existing tax break. Costs incurred from the beginning of 2022 to the end of 2032 would qualify for a 30% tax credit. The credit would fall to 26% in 2033 and 22% in 2034.
www.cnbc.com
"This “residential clean energy credit” extends and enhances an existing tax break. Costs incurred from the beginning of 2022 to the end of 2032 would qualify for a 30% tax credit. The credit would fall to 26% in 2033 and 22% in 2034.
Consumers may qualify for up to $10,000 — or more — in climate tax breaks and rebates in the Inflation Reduction Act
The Inflation Reduction Act offers financial incentives in the form of consumer rebates and tax credits to help the U.S. reduce its greenhouse gas emissions.
EbS-P
Minister of Fire
That’s is a long term for a substantial credit. I’m bet that gets some more commitments from the industry for new designs and testing/retesting.
Evan
Evan
It was 26 or 27% before right? I put a down payment on a BK Princess a couple months ago, and am supposed to pick it up soon. So I’ll be eligible for the 30% credit then?
Todd
Minister of Fire
So does this tax credit only count against federal tax due? If you receive a refund no tax credit?
26% for this year. Yes, it sounds like now you will qualify for the 30%. Stay tuned.
stoveliker
Minister of Fire
No. If you get a refund, you paid too much taxes during the year. The credit goes off of your total tax bill (that depends on AGI, dependents, deductions etc). So if you get a refund, the credit increases your refund.
I've always gotten refunds as I try to have no bill come due April 15. And I've gotten tax credits. They increased the refund.
So, if your total tax BILL is zero(no income made during the year) you don't get anything from this credit. Because it is not a "refundible credit".
But if your total tax bill is nonzero then it doesn't matter whether you paid too much during the year (refund due) or too little (pony up time at April 15), because the calculation will be: total tax bill minus taxes paid during the year from your paycheck minus tax credit = final bill. If the final bill is negative, you get a refund, if positive you have to pay.
Hopefully a price increase by manufacturers doesnt follow to offset the incentive.
lol - why would this time be different. I recall last time there was an incentive....think it was $1000. Stove prices almost immediately shot up $1000+!
Inflation Reduction Act Summary: Energy and Climate Provisions | Bipartisan Policy Center
BPC summarizes below the key energy and climate provisions included in the IRA.
bipartisanpolicy.org
30% is definitely better than 26%. Only question I end up having is whether there is a $2,000 tax credit ceiling on this?
I am struggling between two provisions of the "Inflation Reduction Act" as it pertains to biomass heating.
Energy Efficient Home Improvement Credit that makes it sound like there is a $2,000 cap on the credit for a biomass stove.
Residential Clean Energy Credit that references the 30% tax credit with no reference to a $2,000 cap on the credit for a biomass stove.
I am reading from this article:
Energy Efficient Home Improvement Credit - "It will also be expanded to cover the cost of certain biomass stoves."
Residential Clean Energy Credit - "Previously, the credit was worth 26% of the cost to install qualifying systems that use solar, wind, geothermal, biomass or fuel cell power to produce electricity, heat water or regulate the temperature in your home."
Believe biomass stoves were covered under the Residential Clean Energy Credit section of IRS Form 5695 on line 5.
The cap is key for my circumstance because the zero clearance fireplace we want to install is $7,000 just for the fireplace before we even get into the installation cost that requires a an exterior chimney on the house.
I am struggling between two provisions of the "Inflation Reduction Act" as it pertains to biomass heating.
Energy Efficient Home Improvement Credit that makes it sound like there is a $2,000 cap on the credit for a biomass stove.
Residential Clean Energy Credit that references the 30% tax credit with no reference to a $2,000 cap on the credit for a biomass stove.
I am reading from this article:
Save More on Green Home Improvements Under the Inflation Reduction Act | Kiplinger
Tax credits for energy-efficient home improvements are extended and expanded by the Inflation Reduction Act.
www.kiplinger.com
Energy Efficient Home Improvement Credit - "It will also be expanded to cover the cost of certain biomass stoves."
Residential Clean Energy Credit - "Previously, the credit was worth 26% of the cost to install qualifying systems that use solar, wind, geothermal, biomass or fuel cell power to produce electricity, heat water or regulate the temperature in your home."
Believe biomass stoves were covered under the Residential Clean Energy Credit section of IRS Form 5695 on line 5.
The cap is key for my circumstance because the zero clearance fireplace we want to install is $7,000 just for the fireplace before we even get into the installation cost that requires a an exterior chimney on the house.
Hey there, just chiming in as I've started investigating a new wood stove this season. It appears there may be a $1,200 limit for biomass stoves.
EbS-P
Minister of Fire
Totally could be reading this wrong and this articles formatting is horrible but check here: https://www.kiplinger.com/taxes/605...ax-credits-energy-efficient-home-improvements
I believe it says that the lifetime limit is being increased from $500 to $1200 but I can't tell if that's in regards just to things like windows. I know it said things have moved up to 30% for the tax credit. Check under the section titled:
Energy Efficient Home Improvement Credit
Let me know what you take from this, I could be totally wrong.
stoveliker
Minister of Fire
That is I think for things like windows, not the stove. I believe the stove credit will be 30% (more than this year) but has a limit of $2000.
EbS-P
Minister of Fire
Here
“
So anything from this category has the 2000$ limit
So I read it as 30% up to 2000$ for the anunual limit for everything in that category.
“
- $2,000 for electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and boilers (for this one category, the $1,200 annual limit may be exceeded).
So anything from this category has the 2000$ limit
So I read it as 30% up to 2000$ for the anunual limit for everything in that category.
Deppizzymo
Member
I am assuming this will not lower any of the energy efficiency requirements the stove has to have to qualify... We just purchased a Lopi Liberty this year and I know it did not qualify for the tax credit.
EbS-P
Minister of Fire
Rules are not written yet. One would hope it’s the same 75% HHV and above but……
Deppizzymo
Member
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