The "America's First Fuels Act" incentivizes the use of biomass energy by increasing tax credits for energy-efficient home improvements and introducing a new investment tax credit for biomass heating property.
Angus King
Senator
ME
The "America's First Fuels Act" introduces tax credits and increases existing credit limitations for biomass energy. It provides a tax credit of 30% for open-loop biomass heating property and increases the energy-efficient home improvement credit for biomass stoves and boilers. These changes aim to incentivize the use of biomass for heating and energy production. The provisions of this act will take effect after December 31, 2025.
Heating Your Home with Wood? New Bill Proposes Bigger Tax Breaks Starting 2026
This bill, the "America's First Fuels Act," aims to tweak the tax code to encourage heating with biomass – think wood pellets, chips, or other organic matter. It proposes two main changes, both kicking in for property placed in service after December 31, 2025.
More Bucks Back for Home Biomass Systems
First up, if you're a homeowner thinking about installing a high-efficiency biomass stove or boiler, the existing energy-efficient home improvement credit (Section 25C of the tax code) could get a boost. This bill proposes increasing the maximum credit specifically for these systems to $2,000 per year. This targets homeowners looking to upgrade their heating with qualifying biomass options.
New Tax Credit for Business Biomass Heating
The second major piece introduces a brand new investment tax credit (under a proposed Section 48F) aimed at businesses and potentially larger residential complexes. This would offer a 30% tax credit on the cost of installing "open-loop biomass heating property." What's that? It's equipment that uses biomass (like wood chips or agricultural residues, as defined in Section 45(c)(3)) to generate thermal energy – heat, hot water, or steam for things like heating buildings or running industrial processes.
Reading the Fine Print: Efficiency Matters
It's not just any biomass system that qualifies for these proposed credits. For the new business investment credit, boilers and furnaces need to meet specific standards outlined in the bill. They must hit at least 75% thermal output efficiency – meaning they convert three-quarters of the fuel's energy into useful heat. They also need to be installed indoors, operate below a certain size (50 MMBtu/hour), and include modern emissions controls like an electrostatic precipitator. These requirements aim to ensure the incentivized systems are both efficient and relatively clean-burning. The changes would apply to tax years ending after December 31, 2025.