30% federal tax credit? how??
As we approach the middle of Autumn in 2023, we’ve seen a lot of information circulating about Section 25C otherwise known as the Energy Efficient Home Improvement Credit. For a more detailed understanding on how this credit relates to homes that install a new pellet stove with an efficiency rating of 75% or higher, please visit our Rebates and Credits page HERE. Our Rebates and Credits page should be your main resource for any available Tax Credit programs when it comes to pellet stoves.
In this article, lets cover what is to be expected when filing for this rebate program.
Rebate or Credit: The terms “Rebate” or “Credit” refer to a total CREDIT (reduces the amount owed) to the federal government via your tax filing, additionally, if what you would owe in any given tax year is reduced to 0 by the Section 25C credit, then the remaining portion can be carried over to the following tax year.
This is different from a “deduction”, which would reduce your taxable income (decreasing the amount of taxable federal income), but would not be a direct CREDIT to your tax bill for the year. Consulting a tax professional is essential here, as every scenario is different.
Home: The type of home that would qualify for this tax credit must be your primary residence (more than 50% of the year spent in this home). A landlord can not claim this credit or any other property owner that does not live in this home. If you, as the taxpayer, is renting a home as your primary residence, and you make the eligible upgrades, the credit will be available to you. As always, check with your tax professional for specifics. Under this scenario, if you are renting a home and purchased and installed a pellet stove that qualifies for the rebate, you should claim the tax credit.
How Do I Apply for the Credit?:
2. Be sure to hold on to all receipts for purchase of your pellet stove, hearth pad, piping, installation, or costs associated with the installation of your stove.
3. The 30% credit of the cost for the pellet stove purchase and associated installation costs (not to exceed $2,000) will be applied to your tax liability for the year.
4. Download your qualifying pellet stove purchase tax certificate below:
Pellet stove purchased in 2021-2023: HERE
Pellet stove purchased in 2018-2022: HERE