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Tax Credit Duration Amount: From January 1, 2023, to December 31, 2032, homeowners can get a tax credit of 30% on both the purchase and installation of eligible wood stoves, with an annual cap of $2,000.
Some tax credits are refundable. If a taxpayers tax bill is less than the amount of a refundable credit, they can get the difference back in their refund. Some taxpayers who arent required to file may still want to do so to claim refundable tax credits. Not all tax credits are refundable, however.
Heat pumps and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year. Costs may include labor for installation. Qualified improvements include new: Electric or natural gas heat pumps.
Consumers buying highly efficient wood stoves will be able to claim a 30% tax credit that is based on the full cost of the wood stove, including purchase AND installation. The tax credit is capped at $2,000 annually with no lifetime limit. The 30% tax credit is valid from January 1, 2023 through December 31, 2032.
Any customer who has purchased and installed a wood and pellet stove as of January 1, 2023, through December 31, 2032, will be qualified to claim a 30% tax credit based on the total cost.
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Beginning in 2021, consumers buying qualifying wood or pellet appliances or larger residential biomass heating systems will be able to claim an income tax credit on 26% of the full cost (purchase and installation) of the unit. The credit will remain at 26% through 2021 and 2022, stepping down to 22 percent in 2023.
The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation: 2022: 30%, up to a lifetime maximum of $500. 2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit.
The Wood and Pellet ITC was created by legislation enacted by Congress at the end of 2020. It creates a new credit under Sec. 25(D) of the Internal Revenue Code. The credit covers 26 percent of purchase and installation costs in 2021 and 2022 and covers 22 percent of purchase and installation costs in 2023.

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