The Internal Revenue Service has issued proposed regulations to implement the energy efficient home improvement credit, as modified by the Inflation Reduction Act of 2022, including provisions of the Section 25 tax credit pertaining to wood stoves.&nbsp;For biomass stoves and biomass boilers, the Section 25 credit allows eligible taxpayers to claim a tax credit of up to 30% of certain qualified expenses, up to $2,000.&nbsp;Within the NPRM, the IRS notes that Section 25C(d)(2)(B) provides that qualified energy property includes a biomass stove or boiler that uses the burning of biomass fuel to heat a dwelling unit located in the U.S. that is used by a residence by the taxpayer, or to heat water for use in such a dwelling. The biomass stove or boiler must have a thermal efficiency rating of at least 75% as measured by the higher heating value of the fuel.&nbsp;The NPRM proposes to describe a biomass stove or boiler in exactly the same way as Section 25C(d)(2)(B), but with the addition of “as determined by the U.S. [EPA] for wood stoves.” The IRS indicates that the EPA maintains on online database that provides information regarding the thermal efficiency of wood stoves. “Adopting this source as a means of determining the thermal efficiency rating of biomass stoves or boilers would provide uniformity and simplicity for such measurements,” the IRS said in the NPRM.&nbsp;The IRS published the notice of proposed rulemaking (NPRM) on Oct. 25.&nbsp; A public comment period is open through Dec. 24 and a public hearing is scheduled to be held Jan. 21.&nbsp;A full copy of the NPRM is available on the Federal Register <a href="https://www.federalregister.gov/documents/2024/10/25/2024-24110/energy-efficient-home-improvement-credit">website</a>.

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The IRS has issued proposed regulations to implement the energy efficient home improvement credit, as modified by the Inflation Reduction Act of 2022, including provisions of the Section 25 tax credit pertaining to wood stoves. 

IRS publishes proposed regulations for updated Section 25 tax credit

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