Guide
Firewood Business Taxes and Profit: A Seller’s Guide
Selling firewood legitimately can pay. Most sellers who think it can’t are taxing the sale price instead of the profit, and missing the costs and write-offs that work in their favour.
Last reviewed November 2, 2026Tax year 20268 min readBy Lorne Wanamaker, firewood seller
On this page· Tax comes out of your profit, not your price
Tax comes out of your profit, not your price
You hear it at every wood yard: by the time the tax is paid, there’s nothing left of a face cord. That math almost always takes tax off the whole sale price. On your return, your sales and your business costs go on the same form, T2125 in Canada1 and Schedule C in the US2, and what’s left after the costs is the income that is taxed.
One face cord, two ways to do the math
| Line | Tax on the price | Tax on the profit |
|---|---|---|
| Sale price | $140.00 | $140.00 |
| Log cost ($3,000 load ÷ 34 face cords) | $88.24 | $88.24 |
| Fuel, chains, oil, wear (example) | not counted | $10.00 |
| Taxable amount | $140.00 | $41.76 |
| Tax at 35% | $49.00 | $14.62 |
| Kept per face cord | $2.76 | $27.14 |
Sale price
- Tax on the price
- $140.00
- Tax on the profit
- $140.00
Log cost ($3,000 load ÷ 34 face cords)
- Tax on the price
- $88.24
- Tax on the profit
- $88.24
Fuel, chains, oil, wear (example)
- Tax on the price
- not counted
- Tax on the profit
- $10.00
Taxable amount
- Tax on the price
- $140.00
- Tax on the profit
- $41.76
Tax at 35%
- Tax on the price
- $49.00
- Tax on the profit
- $14.62
Kept per face cord
- Tax on the price
- $2.76
- Tax on the profit
- $27.14
The 35% is an illustration (income tax plus pension contributions); yours depends on your total income. The point is which number it is taken from.
Try your own numbers. The calculator shows both versions side by side.
- Sale price
- $140.00
- Log cost
- −$88.24
- Other costs
- −$10.00
- Profit
- $41.76
- Tax at 35% of profit
- −$14.62
- You keep
- $27.14
Tax on profit (the real math), per face cord
- Sale price
- $140.00
- Log cost
- −$88.24
- Tax at 35% of the price
- −$49.00
- Looks like you keep
- $2.76
Tax on the price (the mistake)
This is the math that makes firewood look like it can't pay. It counts tax on money that went to the logs.
The real fix for a thin margin is not a deduction. It is knowing your cost per cord and charging a price that covers it, which is what the next sections are about.
Know your real cost per cord
Most sellers who underprice have never added up everything a cord costs them. Go through the list once, with last year’s receipts.
- Log loads, and the trucking to bring them in.
- Fuel for the saws, the splitter or processor and the truck.
- Chains, bars, bar oil, files and wedges.
- Wear and repairs on every machine.
- Insurance.
- Labour: the crew you pay, and your own hours.
- Yard or stand costs.
- Website, ads and card fees.
Records that pay for themselves
- Keep every receipt, including the small cash ones: chains, bar oil, gas cans.
- Log every load: supplier, date, price and what it yielded.
- Log every sale, cash included, with the date, quantity and price. In Canada, income records must show the date, amount and source, whether you were paid in cash, property or services3.
- Keep a log for the truck: business trips and total kilometres or miles.
- Photograph paper receipts. Thermal paper fades.
How long to keep them. In Canada, generally six years from the end of the last tax year they relate to3. In the US, generally three years; six if you leave out income of more than 25% of the gross income on your return; employment tax records at least four years4.
Equipment: write it off faster
A $12,000 processor is not, by default, a $12,000 expense in the year you buy it. Its cost is spread over several years as depreciation, called capital cost allowance in Canada5. Both countries now have rules that bring more of it into the first year.
- US: a permanent 100% first-year (bonus) depreciation for qualified property acquired after January 19, 2025, and Section 179 expensing of up to $2,500,000, reduced once that year’s purchases pass $4,000,0006.
- Canada: Budget 2025’s implementing bill (Bill C-15, Royal Assent March 26, 2026) introduced a Productivity Super-Deduction that lets businesses write off a larger share of new investments right away7. How it applies to a splitter or a truck is a question for your accountant.
Inventory timing: why fall wood can raise your tax bill
In Canada you claim the cost of the goods you sell in the period you sell them1. Logs bought in October that are still in your yard as firewood on December 31 are closing inventory, not an expense of that year.
Two $3,000 loads bought in October
| Year 1 | Year 2 | |
|---|---|---|
| Wood sold from the loads | one load’s worth | the other load’s worth |
| Counted as cost of goods sold | $3,000 | $3,000 |
| Left as inventory on December 31 | $3,000 | $0 |
Wood sold from the loads
- Year 1
- one load’s worth
- Year 2
- the other load’s worth
Counted as cost of goods sold
- Year 1
- $3,000
- Year 2
- $3,000
Left as inventory on December 31
- Year 1
- $3,000
- Year 2
- $0
Paying for both loads in Year 1 doesn’t make both a Year 1 cost. The second load lowers Year 2’s tax instead.
US small businesses have their own inventory rules; the USA guide covers them.
Sales tax: when you have to charge it
Canada. Firewood is a taxable supply for GST/HST, not zero-rated8. You don’t have to register while your taxable sales stay at or under $30,000 over four consecutive calendar quarters. Go over $30,000 in a single quarter and you must register, effective no later than the sale that put you over9. Your associates’ sales count with yours9.
US. Sales tax is set state by state, and so is how firewood is treated. The USA guide will go through the states.
Selling by the cord legally
In Canada, bulk firewood may only be sold by the stacked cubic metre, the cubic foot, or the cord (128 cubic feet) and fractions of a cord, and "face cord" and "stove cord" are illegal terms10. NIST Handbook 130, the model US rule, says the same of "face cord", "rack", "pile" and "truckload"11.
Keep the word your customers know and put the legal quantity first: 1/3 cord (42.7 cu ft, 1.21 m³) of 16-inch wood, the size most people call a face cord. The face cord calculator works it out for any piece length.
Moving firewood: pest rules
Canada. The Canadian Food Inspection Agency says to buy and burn firewood locally, and to buy wood cut less than 80 kilometres from where it is sold12. Ash firewood can’t be moved out of an emerald ash borer regulated area at all; other firewood only through facilities registered under CFIA’s approved facility program13.
US. The federal emerald ash borer quarantine ended on January 14, 202114. Check your state’s firewood rules before you sell across a state line.
Legal strategies, grey areas, and where the line is
Tax planning is legal. Hiding income is not. Here is the difference.
Clearly legal
| Move | Why it works | Where the line is |
|---|---|---|
| Pay family members for real work | In the US, a child under 18 working in a parent’s sole proprietorship pays no social security or Medicare tax15 | Pay what the work is worth, actually pay it, and record the hours |
| Track every small expense | Chains, oil, gloves, files and safety gear add up to hundreds a year | Take out the share you use for yourself |
| Keep a vehicle log | It is the proof that the business share of the truck is real | Write it as you go, not at tax time |
Pay family members for real work
- Why it works
- In the US, a child under 18 working in a parent’s sole proprietorship pays no social security or Medicare tax15
- Where the line is
- Pay what the work is worth, actually pay it, and record the hours
Track every small expense
- Why it works
- Chains, oil, gloves, files and safety gear add up to hundreds a year
- Where the line is
- Take out the share you use for yourself
Keep a vehicle log
- Why it works
- It is the proof that the business share of the truck is real
- Where the line is
- Write it as you go, not at tax time
Grey areas: allowed, with care
| Move | Why it works | Where the line is |
|---|---|---|
| Stay under the GST/HST threshold | Under $30,000 over four quarters you don’t have to register9 | Your associates’ sales count with yours9: splitting one business in two doesn’t reset it |
| Barter: wood for a repair, wood for logs | It saves cash | It still counts: in Canada, sales include goods and services you receive in exchange1 |
| Sell used equipment with its history | A documented machine sells for more | Above its remaining value, the difference is income again5 |
| Heat your own home with your wood | Nothing to deduct | Your own wood is personal: don’t claim it |
Stay under the GST/HST threshold
Barter: wood for a repair, wood for logs
- Why it works
- It saves cash
- Where the line is
- It still counts: in Canada, sales include goods and services you receive in exchange1
Sell used equipment with its history
- Why it works
- A documented machine sells for more
- Where the line is
- Above its remaining value, the difference is income again5
Heat your own home with your wood
- Why it works
- Nothing to deduct
- Where the line is
- Your own wood is personal: don’t claim it
Not grey: don’t do this
- Leaving cash sales off the books.
- Paying your kids or your spouse for work they didn’t do.
- Claiming a personal truck, saw or heating wood as 100% business.
- Making up receipts or a mileage log after the fact.
- Splitting one business into two names to stay under a sales-tax threshold.
An hour with an accountant who knows small resource businesses usually pays for itself the first year.
Pricing levers that beat any deduction
- Sell dry wood as dry, and say so with a moisture reading.
- Charge delivery and stacking separately.
- Sell kindling and small bundles (campgrounds, corner stores, cottages): they bring far more per cubic foot.
- Price the early season and the late season differently.
- Remind repeat customers before they run out.
Pick your country
The country guides have the numbers: forms, rates, depreciation classes, sales tax and the rules where you sell.
Questions
Do I have to report cash firewood sales?
Yes. In Canada, record your income whether you were paid in cash, property or services3.
Is firewood tax-exempt?
No. Your profit is income like any other, and for GST/HST firewood is taxable, not zero-rated8.
How much tax will I pay per cord?
Tax is figured on what is left after your costs, not on the price. Put your own numbers in the calculator.
Can I write off my chainsaw and splitter?
Yes, as depreciation over time, and both countries have rules that bring more of it into the first year. See Equipment.
Do I need to charge sales tax on firewood?
In Canada, not while your taxable sales stay at or under $30,000 over four calendar quarters9. In the US it depends on the state.
Is it legal to sell a face cord?
Not under that name on paper, in Canada or in US states that follow Handbook 130. Sell the legal quantity and add the familiar word: the face cord calculator shows how.
Sources
- 1.T4002 Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 2, Income, Canada Revenue Agency ↩
- 2.Instructions for Schedule C (Form 1040), Internal Revenue Service ↩
- 3.Business records, Canada Revenue Agency ↩
- 4.How long should I keep records?, Internal Revenue Service ↩
- 5.T4002: Chapter 4, Capital cost allowance, Canada Revenue Agency ↩
- 6.Working Families Tax Cuts: businesses, Internal Revenue Service ↩
- 7.Legislation passes to implement Budget 2025 (March 26, 2026), Department of Finance Canada ↩
- 8.GST/HST Memorandum 4.4, Agriculture and Fishing, Canada Revenue Agency ↩
- 9.When to register for and start charging the GST/HST, Canada Revenue Agency ↩
- 10.Selling firewood, Measurement Canada ↩
- 11.Handbook 130 (2026), Uniform Regulation for the Method of Sale of Commodities, §2.4, National Institute of Standards and Technology (NIST) ↩
- 12.Hazards of moving firewood, Canadian Food Inspection Agency ↩
- 13.Regulated areas and items: Emerald ash borer, Canadian Food Inspection Agency ↩
- 14.Emerald Ash Borer, USDA Animal and Plant Health Inspection Service ↩
- 15.Family employees, Internal Revenue Service ↩
Changes to this page
- : First published.
General information, not tax or legal advice. Rules change and depend on your situation: check with an accountant before you act on it.
