Q: Is it appropriate to use incense on Ash Wednesday?
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A: Totally up to you. Incense may be used on any day. Most people like to use it to indicate a day of special solemnity, but even that is not required.
I realize that some people could confuse the symbol of ashes on the forehead and ashes in the censer, but that need not fit into the decision. If you feel in your community that incense would add or detract from the penitential feel of the day, you could make an argument for or against its usage based on local practice.