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Hey folks, in December 2022, the IRS unveiled some new guidelines for the latest 25(C) tax credit. You can use it for installations started between 2023 and the end of 2032.

We're not accountants, but here's what we've been able to figure out so far.  Make sure to get professional help before filing your taxes!

The Hearth, Patio and Barbecue Association (HPBA) has highlighted the IRS guidance for the 25(C) tax credit.

Biomass Tax Credit Highlights

  • You can deduct 30% of your costs, including labor, up to $2,000 per year.
    • For example, if you spend $3,000 on a wood stove and $2,000 on labor, you can deduct $1,500 on your taxes (30%).
  • This is a non-refundable credit.  That means if you get a tax refund already, you won't be able to get a tax credit.
  • It's not eligible if you use the property for business more than 20% of the time or if it's a  new construction.
  • There is no lifetime limit.  You could claim the full $2,000 each year until 2032.

How to Claim Your Tax Credit

When you file your taxes, you will include Form 5695.  Here is our understanding of how to fill out the Form 5695.

Explanation for Form 5695