Residential Wood Heating Fuel Exemption
Administered by New York State Department of Taxation and Finance
New York exempts wood used for residential heating from the state sales tax (4%) and potentially local sales taxes, which range from 1.5% to over 4% depending on your locality. Check Publication 718-R or the Department of Taxation and Finance's jurisdiction lookup to confirm your local rate, and provide your seller with proof of residential use to claim the exemption at purchase.
Your residential customers can purchase wood for heating tax-free at the state level; advise them to verify local tax applicability using the Department of Taxation and Finance's tools. For mixed-use properties where residential use is 75% or more, the full exemption applies; below 75%, you must allocate the exemption proportionally and file Form TP-385 with the customer's tax documentation.
This is a permanent sales tax exemption (not time-limited) administered by the New York Department of Taxation and Finance covering wood, wood pellets, and compressed wood products for residential heating in owner-occupied and rental residential structures. State exemption is automatic at 4% plus MCTD taxes; local exemptions vary by jurisdiction and require municipal/county action—cities over 1 million population must pass a specific resolution. Mixed-use properties require prorated calculation using square footage, with Form TP-385 certification needed when residential use percentage changes.
Program details
- Program ID
- 4874
- Last updated
- 4/14/2026
Eligibility
- Sectors
- residential multifamily residential
- Technologies
- biomass
Program summary
New York exempts retail sales of wood used for residential heating purposes from the state sales tax. The law also permits local governments (municipalities and counties) to grant an exemption from local sales taxes. If a city with a population of 1 million or more chooses to grant the local exemption, it must enact a specific resolution that appears in the state law. Local sales tax rates in New York range from 1.5% to more than 4% in addition to the general state sales tax rate of 4%. For buildings with both residential and non-residential units where more than 25% of the space is used for non-residential purposes, an allocation must be made between the amount of fuel used for residential purposes and that used for non-residential purposes. The non-residential portion remains subject to the state sales tax.
This exemption also applies to natural gas, propane (sold in containers of 100 pounds or more), electricity, steam, fuel oil (except diesel motor fuel), and coal.
The New York Department of Taxation and Finance publishes a variety of sales tax reports detailing local tax rates and exemptions, including those for residential energy services. The residential energy services sales tax list (Publication 718-R) is updated frequently.
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
