Do Gas Fireplace Inserts Qualify for a Tax Credit?

A gas fireplace insert does not qualify for a federal tax credit, and it never has. The Energy Efficient Home Improvement Credit under Internal Revenue Code Section 25C covered biomass-burning inserts — those that run on wood, pellets, or similar plant-based fuels — not units running on natural gas or propane.¹ And the credit itself is now on a short clock: the One Big Beautiful Bill Act, signed July 4, 2025, ended it for any property placed in service after December 31, 2025.² So a gas insert bought today gets you nothing federally, and a gas insert bought later gets you nothing either.

Why Gas Inserts Were Never Eligible

The credit covered biomass stoves and boilers as a category of qualified energy property. To fit that category, the appliance had to burn biomass fuel — wood logs, compressed wood pellets, wood chips, or other plant-based material — to heat a home or produce hot water.¹ A unit running on natural gas or propane is not a biomass appliance, no matter how high its efficiency rating.

Confusion often comes from the fact that some manufacturers sell high-efficiency pellet-burning inserts that look similar to gas models and fit into the same fireplace openings. Those pellet inserts could qualify. Not because of how they look, but because they burn biomass. If a salesperson told you a natural gas insert qualifies for a federal tax credit, that was incorrect.

One nearby provision is worth flagging so you don’t assume it fills the gap. Natural gas and propane furnaces and hot water boilers did qualify for the credit as a separate category of residential energy property, with a $600 per item cap.³ Fireplace inserts are not furnaces or boilers, so that category did not extend to them.

No Federal Credit for Inserts Installed After 2025

The Inflation Reduction Act of 2022 was supposed to keep the Energy Efficient Home Improvement Credit running through December 31, 2032.¹ The One Big Beautiful Bill Act pulled that end date forward. No property placed in service after December 31, 2025 is eligible for the credit.²

If you’re shopping in 2026 or later, there is no federal tax credit for a fireplace insert of any fuel type, at any efficiency rating.

If You Installed a Qualifying Biomass Insert in 2025

A biomass insert placed in service on or before December 31, 2025 can still be claimed on your 2025 federal return. The rules below are what matter for that filing.

The 75% Efficiency Requirement

To qualify, the insert had to burn biomass fuel to heat a home or provide hot water, and it needed a thermal efficiency rating of at least 75%, measured using the higher heating value (HHV) of the fuel.¹ The manufacturer had to certify that the specific model met that threshold. Not every biomass insert clears 75% HHV, especially older or budget models, so the manufacturer’s specification sheet is what you check before assuming eligibility. The EPA Certified Wood Heater Database lists efficiency ratings you can use to confirm a model.⁴

How Much the Credit Is Worth

The credit equals 30% of the total cost of the qualifying insert, including installation labor.¹ Biomass stoves and boilers share an annual cap of $2,000 with heat pumps and heat pump water heaters. That $2,000 sits outside the $1,200 annual limit that applies to windows, doors, insulation, and other categories, for a combined maximum of $3,200 per year.³

The credit is non-refundable. It can reduce your federal tax to zero but cannot generate a refund past that. If you owe $1,500 in federal tax and have a $2,000 credit, you get $1,500 of benefit and the other $500 is lost. There is no carryforward to a future year.⁵ Homeowners who buy late in the year and already have most of their tax covered through withholding often find the credit worth less than expected.

Which Homes Count

Biomass stoves and boilers have looser location rules than other items under the credit. The insert has to be in a dwelling located in the United States that you use as a residence, but it does not have to be your primary home. A second home works. A home you rent from someone else and use as a residence also works.⁶ A landlord who does not personally use the property as a residence cannot claim the credit.

Records to Keep

Hold on to the manufacturer’s certification statement confirming the model meets the 75% HHV threshold. These are typically available on the manufacturer’s website or from the retailer at purchase. Keep your purchase receipt or invoice, with installation labor itemized separately if possible, since both the product cost and the labor go into the 30% calculation.¹ Note the date the insert was actually operational in the home. That placed-in-service date determines the tax year, not the date you ordered or paid.

Filing the Claim

You claim the credit on Part II of IRS Form 5695, Residential Energy Credits.⁷ Enter the total qualifying cost, including installation, on the line for biomass stoves and boilers. The form runs the 30% calculation and applies the $2,000 cap, and it also keeps each subcategory within its own limit if you claimed other improvements the same year. Use the 2025 version of the form for a 2025 installation, even if you file the return in 2026.

1
Office of the Law Revision Counsel. 26 USC 25C – Energy Efficient Home Improvement Credit
2
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
3
Internal Revenue Service. Energy Efficient Home Improvement Credit
4
U.S. Environmental Protection Agency. EPA Certified Wood Heater Database
5
Internal Revenue Service. Energy Efficient Home Improvement Credit – Timing of Credits
6
Internal Revenue Service. Energy Efficient Home Improvement Credit – Qualifying Residence
7
Internal Revenue Service. Instructions for Form 5695 – Residential Energy Credits