Wood and Pellet Heater Tax Credit Extension Passes the U.S. House of Representatives

The U.S. House of Representatives passed the Build Back Better Bill on Friday, November 19th, by a vote of 220-213. The $1.75 trillion social policy and climate change bill includes language that would extend the tax credit for wood and pellet heaters with a thermal efficiency of at least 75% per the higher heating value (HHV) of the fuel.

The language would:

• Increase the credit from 26% to 30% of purchase and installation costs starting January 1, 2022

• Extend the credit through December 31, 2031

• Move the tax credit from Section 25(D) to Section 25(C) of the tax code

• Eliminate the lifetime limit or cap on the amount a qualifying taxpayer could claim under a 30% credit

• Maintain the minimum efficiency requirement of at least 75% per the higher heating value (HHV) of the fuel

The House passage sets the stage for the U.S. Senate to take up the bill for a vote between U.S. Thanksgiving and the Christmas/New Year’s Recess. We encourage all HPBA members and non-members alike to send an email to U.S. Senators right now, urging them to support the wood and pellet heater tax credit. Use HPBA’s advocacy email tool, here. The tax credit can be claimed in the year in which a qualifying product’s installation is complete. So, if a person buys a qualifying product in 2021, but it isn’t installed until 2022, they would claim it on their 2022 tax return the following year. Frequently asked questions can be found on our website, here. Feel free to contact Rachel Feinstein with any questions.