Advancing Carbon-Free Home Heating

Federal Tax Credits for Bio-fuel Fired Heating Appliances

With the implementation of the Inflation Reduction Act of 2022, Congress has created a $600 consumer income tax credit for the installation of renewable fuels compatible liquid fuel appliances.
With this act, low-carbon liquid fuel heating appliances have been identified as a viable path for GHG reductions.he heating appliance qualifies by meeting three conditions:

• Placed into service after December 31, 2022
• Meets or exceeds Energy Star 2021 (boilers and furnaces) efficiency criteria
• Rated by the manufacturer for use with fuel blends at least 20% of the volume of which consists of an eligible fuel (eligible fuel: biodiesel or renewable diesel)

If your liquid fuel fired appliances meet these qualifications, homeowners can claim the credit using IRS Form 5695 Residential Energy Credits. Form 5925 is being updated by the IRS and should be available early in 2023.

Of course, the homeowner needs to be made aware of the credit’s availability. NORA suggests that manufacturers include this information to their supply chain, installers and the homeowner via product marketing, installation manuals and perhaps consumer literature.