Increased limitation for biomass stoves and boilers under energy efficient home improvement credit

(a)

In general

Section 25C(b)(5) of the Internal Revenue Code of 1986 is amended by striking shall not, in the aggregate, exceed and all that follows and inserting the following:

shall not exceed—(A)with respect to amounts paid or incurred, in the aggregate, for property described in clauses (i) and (ii) of subsection (d)(2)(A), $2,000, and(B)with respect to amounts paid or incurred, in the aggregate, for property described in subsection (d)(2)(B), $10,000.

(b)

Effective date

The amendment made by this section shall apply to property placed in service after December 31, 2025.

Investment tax credit for biomass heating property

(a)

In general

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48E the following new section:

48F.

Open-loop biomass heating property credit

(a)

In general

For purposes of section 46, the open-loop biomass heating property credit for any taxable year is 30 percent of the basis of the open-loop biomass heating property placed in service during such taxable year. (b)

Open-Loop biomass heating property

For purposes of this section—(1)

In general

The term open-loop biomass heating property means any property which—(A)uses open-loop biomass (as defined in section 45(c)(3)) to produce thermal energy in the form of heat, hot water, hot air, or steam, and(B)is used for space heating, air conditioning, domestic hot water, industrial process heat, or any combination of the foregoing.(2)

Requirements for boilers and furnaces

Such term shall not include any boiler or furnace unless such boiler or furnace—(A)operates at thermal output efficiencies of not less than 75 percent (measured by the lower heating value of the fuel at nominal output), (B)is installed indoors, (C)operates at a scale smaller than 50 MMBtu, and(D)is equipped with an electrostatic precipitator or other similar emissions control technology.(c)

Other rules

(1)

Special rule for property financed by tax-exempt bonds

Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section. (2)

Certain Progress Expenditure Rules Made Applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

(b)

Conforming amendments

(1)Section 46 of such Code is amended by striking and at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting , and, and by adding at the end the following new paragraph:

(8)the open-loop biomass heating property credit.

(2)Section 49(a)(1)(C) of such Code is amended by striking and at the end of clause (vii), by striking the period at the end of clause (viii), and by adding at the end the follow new clause:

(ix)the basis of any open-loop biomass heating property credit.

(3)Section 50(a)(2)(E) of such Code is amended by striking or 48E(e) and inserting 48E(e), or 48F(c)(2).(4)The table of sections for subpart D of part IV of subchapter A of chapter 1 of subtitle A of such Code is amended by adding at the end the following new item:

Sec. 48F. Open-loop biomass heating property credit.

(c)

Effective date

The amendments made by this section shall apply to periods after December 31, 2025, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).