EPA regulations for biomass stoves changed in 1991, requiring them to be more efficient and to produce less smoke, about 60% to 80% less than older stoves or traditional fireplaces. Thermal efficiency for tax credit-qualified stoves must be rated at least 75%, meaning three-quarters or more of the fuel is turned into heat.

Although wood and wood pellet stoves are most common, biomass fuels can come in a number of renewable forms such as corn or even aquatic plants. Stoves capable of burning a variety of fuel types are more expensive.

In addition to lowering heating bills, biomass stoves reduce emissions as well as dependency on non-renewable fuels like heating oil, kerosene, and natural gas. But before you commit to one of these stoves, inquire about local laws governing wood burning. Some areas, particularly in California, limit when you can burn wood due to pollution concerns.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.