Are Pellet Stoves Under the Renewable Energy Credit?
- The United States Department of Energy states that renewable energy credits are tax deductions given to people who participate in the use of renewable energy projects in place of conventional electricity, referred to as "commodity electricity." The Department of Energy also allows customers of conventional electricity providers to purchase green certificates as renewable energy credits since actual wind, hydro-power and solar energy is not available to them.
- Pellet stoves are referred to as biomass stoves by the Energy Star program. Pellet stoves use small compacted pellets made of renewable fuel or biomass. Biomass consists of natural product leftovers such as wood waste, residues, plants, grasses, agricultural crop leftovers and other natural fibers from various agricultural and industrial processes. When this energy-efficient type of heating replaces other less-efficient forms, not only are fewer CO2 emissions released into the air but the energy source, biomass pellets, are already being replenished by typical industrial and agricultural endeavors.
- Unfortunately, pellet stoves do not qualify for renewable energy credits as they are not provided by a utility that powers the home but instead are an energy-efficient way to heat areas of the home. Pellet stoves do qualify for another kind of energy credit called the residential energy credit. To qualify for the residential energy credit, a pellet stove must have a thermal efficiency rate of 75 percent or greater in an existing permanent residence that is not new construction or a rental, according to Energy Star.
- Despite the fact that you can't claim the renewable energy credit for pellet stoves, you can still claim the residential energy credit by submitting your pellet stove's Manufacturer's Certification Statement along with the IRS Form 5695 entitled "Residential Energy Credits" with your federal tax return. Up to $300 may be claimed for the purchase and installation of a qualifying pellet stove. Remember to keep your receipt with your tax return in case of audit for proof of purchase and eligibility for the credit.
