Summary

Increases the dollar caps available under the residential energy efficient home improvement tax credit for certain biomass stoves and boilers and creates a new 30% investment tax credit for qualifying open‑loop biomass heating systems. Both changes apply to property placed in service after December 31, 2025. The measure defines what counts as eligible open‑loop biomass heating property, sets performance and equipment requirements for boilers and furnaces, and makes corresponding technical changes to the Internal Revenue Code so taxpayers can claim the new 30% credit and the higher residential credit caps.

Key Points

• Raises residential energy efficient home improvement credit caps for qualifying biomass stoves/boilers to $2,000 and raises caps for other qualifying biomass property to $10,000.
• Creates a new 30% investment tax credit for qualifying open‑loop biomass heating property (boilers and furnaces) meeting defined equipment and performance standards.
• Both the increased caps and the new ITC apply only to property placed in service after December 31, 2025.
• Defines eligibility and technical/performance requirements that equipment must meet to qualify for the 30% ITC.
• Requires conforming amendments to the Internal Revenue Code so the new credit integrates with existing tax rules.
• Will require taxpayers to retain documentation and likely require vendors/manufacturers to provide evidence of compliance with performance specs.
• Aims to spur demand for biomass heating systems and related supply chains (manufacturers, installers, and fuel suppliers).
• Creates a new federal tax expenditure (reduced revenue) dependent on how many taxpayers claim the credits.

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