America's First Fuels Act
America's First Fuels Act seeks to expand and modernize tax incentives for biomass heating equipment. It increases the existing energy-efficient home improvement credit (Section 25C) limits specifically for biomass heating products, raising the potential total credits available for biomass stoves and boilers placed in service after 2025. In addition, it creates a new investment tax credit (ITC) for open-loop biomass heating property (Section 48F), offering a 30 percent credit of the property’s cost for eligible open-loop biomass heating equipment installed in that period. The bill also sets specific performance and location criteria for eligible boilers and furnaces (efficiency, indoors installation, size limit, and emissions controls) and defines what counts as open-loop biomass heating property. The overall aim is to encourage the adoption of biomass-based heating technologies as part of domestic energy and emissions strategies, with stricter eligibility rules and a delayed effective date to align with broader policy windows.
Key Points
- 1Increased limits for biomass stoves and boilers under the energy efficient home improvement credit (25C): the aggregate credit limits would be increased to $2,000 for property described in subsection (d)(2)(A) and $10,000 for property described in subsection (d)(2)(B), applying to property placed in service after December 31, 2025.
- 2New open-loop biomass heating property credit (ITC): the bill adds Section 48F, allowing a 30 percent ITC of the basis of open-loop biomass heating property placed in service in a taxable year.
- 3Definition and standards for open-loop biomass heating property: eligible property must use open-loop biomass to produce thermal energy (heat, hot water, hot air, or steam) for space heating, hot water, air conditioning, or industrial process heat, and must meet certain boiler/furnace requirements (minimum 75% thermal efficiency by LHV, installed indoors, under 50 MMBtu capacity, and equipped with emissions control like an electrostatic precipitator).
- 4Conforming amendments and administrative details: the bill adjusts related code provisions to recognize the new credit (adding 48F to the list of credits and adjusting bases and related definitions). It also references special rules for bonds and progress expenditures consistent with historical ITC treatment.
- 5Effective date: provisions apply to periods after December 31, 2025, for taxable years ending after that date, with rules similar to prior ITC transition provisions.