So how does this tax credit thing work?

Answer: It is not a rebate or a deduction. It is a "credit." That means, according to the IRS, that it changes the amount of tax that you pay. If you pay taxes at the end of the year, you pay less by the amount of the tax credit. If you pay taxes every week via witholding you will get a bigger refund at the end of the year as a result of the tax credit. The credit is 30% of the total spent on qualifying stoves up to $1500. It can also include pipes and installation. Don't wait too long. This program could follow the "cash for clunkers" thing into the ash bin.