Residential Modern Wood Heat Installations Qualify for 26% Tax Credit

Modern wood heating installations in homes are now eligible for the same federal tax credit that has been available to other renewable energy systems for years.

Homeowners can receive up to a 26% federal tax credit on residential installations of high-efficiency wood heating systems such as pellet stoves and whole-home pellet boilers. When combined with state rebates and incentives like those offered by Efficiency Maine, NH Public Utilities Commission, Vermont, and Renewable Heat NY, consumers can now switch to renewable, efficient wood heat for the same amount of money that a new oil boiler or furnace would cost.

The Center is grateful to our partners who for years advocated for a federal tax credit for modern wood heating systems and to the region’s senators who helped push the tax credit into existence. The long-sought-after tax credit was included in the Consolidated Appropriations Act of 2021.

An independent analysis concluded that using wood pellets for heat reduces greenhouse gas emissions by 54% compared to oil and 59% to natural gas. The life-cycle analysis accounted for all greenhouse gas emissions from sourcing, processing, and transporting fuels. The study concluded that impacts decrease further after 50 years, with greenhouse gas emissions from pellets dropping to 62% less than oil, 67% less than natural gas, and 56% less than propane.

For more information about modern wood heating options, visit the Feel Good Heat website.