Wood Energy Production Credit
Administered by Division of Energy
This tax credit is for businesses that process Missouri forest waste into wood fuel like pellets—you can earn $5 per ton of processed fuel produced, or $20 per ton if you make charcoal. You must apply by June 30 each year with proof of sales from at least 10% of your customers, and any unused credit can carry forward up to four years or be sold to another party.
If you're a wood energy producer using Missouri forestry residues, you can claim a state income tax credit of $5 per ton of processed material (4× for charcoal) to offset your tax liability. You'll need to gather customer purchase verification forms for at least 10% of your fuel sold and submit your application to Missouri DNR by June 30 annually—note that you cannot claim both this state credit and the federal wood energy credit.
This is a production incentive tax credit for processors of Missouri forest industry residues, running through June 30, 2028, with an annual cap of $6 million per fiscal year. The credit is $5/ton for processed fuel or $20/ton for charcoal; unused credits can carry forward up to four years or be transferred to third parties within five years. Applications require 10% customer verification and a complete sales list submitted by June 30; appropriations must be made before credits are authorized.
Program details
- Program ID
- 234
- Effective
- 1/1/1997
- Expires
- 6/30/2028
- Last updated
- 3/27/2026
Eligibility
- Sectors
- commercial industrial
- Technologies
- biomass
Incentive amount
Maximum of $6,000,000 per fiscal year (specific amount depends on appropriation)
Program summary
The Wood Energy Tax Credit allows individuals or businesses processing Missouri forestry industry residues into fuels a state income tax credit of $5.00 per ton of processed material (e.g., wood pellets). A multiplier of 4 applies to charcoal, based on the amount of Missouri forest industry residue required to produce one ton of charcoal. Any amount of credit exceeding the tax due by a company in the year of production may be carried over to a subsequent taxable year, not to exceed four years. A credit earned under this program may also be transferred to third parties for use within this five-year period. To be considered an eligible fuel, forestry industry residues must have undergone some thermal, chemical or mechanical process(es) sufficient to alter the residues into a fuel product. In 2022, H.B. 3 extended the tax credit to June 30, 2028, established an annual cap of $6 million per fiscal year, and added a requirement that an appropriation for the tax credits needs to be made before they are authorized.
Click here to access Missouri's Wood Energy Tax Credit Application Form.
Contact & resources
- Contact email
- energy@dnr.mo.gov
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
