Tax Credit for Forest Derived Biomass

This tax credit is not available to homeowners. It applies only to businesses that manufacture wood biomass fuel from forest residues and other lignocellulosic feedstocks, with a reduced B&O tax rate of 0.138 percent on manufacturing income until January 1, 2029.

If you manufacture liquid or gaseous fuel from wood, forest residues, or dedicated energy crops (excluding chemically treated wood), you can report income under the Manufacturing of Wood Biomass Fuel B&O tax classification at a preferential 0.138 percent rate. You must file an Annual Tax Performance Report by May 31 each year to maintain eligibility, or risk losing 35-50 percent of claimed incentive benefits.

The forest-derived biomass B&O tax credit offers a reduced tax rate of 0.138 percent for manufacturers producing liquid or gaseous fuel from lignocellulosic feedstocks, targeting commercial and industrial biomass producers in Washington. The incentive expires January 1, 2029, and participating businesses must file annual tax performance reports; non-compliance results in immediate recovery of 35-50 percent of claimed credits.