Qualifying Wood Stove Deduction

June 13, 2006

Summary

The state of Idaho offers taxpayers who buy new wood stoves, pellet stoves, or natural gas or propane heating units for their residences a tax deduction to replace old, uncertified wood stoves. You may deduct the cost of a new natural gas or propane heating unit, pellet stove, or EPA-certified wood stove if:

• it is in your residence,
• it replaces an old wood stove that does not meet EPA requirements,
• the purchase and replacement occurs within the same year, and
• the old wood stove is dropped off at a Department of Environmental Quality (DEQ)-approved site within 30 days.

The deduction is up to 40% of the cost of purchase and professional installation in the year the wood stove is replaced. For the next three years the deduction is 20% of the total cost per year. The total annual deduction cannot exceed $5,000. The tax deduction applies only to the replacement of uncertified wood stoves. A common hearth fireplace is not considered a wood stove. However, the tax deduction applies if an old fireplace insert is replaced with another that meets current EPA standards, or with a certified wood stove, pellet stove, a gas/propane appliance, or other eligible heating device. You must receive proof via a receipt when you drop your old wood stove off at a DEQ-approved site to be eligible for the credit. The fire-brick lining must be removed before drop-off. For additional tax credit instructions please visit the DEQ woodstoves website.