Planning a new heat pump? The funding conditions for the new KfW BEG subsidy program have been finalized. (Photo: © German Heat Pump Association (BWP) eV)
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July 2026
The new conditions for heating system subsidies and heat pump subsidies have been finalized. For those who decide quickly and have a valid application: the old conditions apply until July 20th.
The German government has decided that subsidies for heat pumps will decrease. The new subsidy conditions will apply from July 21, 2026. BEG funding from KfWThose who decide to apply at short notice and have a valid application confirmation can receive funding under the previous conditions until July 20th. Applications that have already been approved are not affected by the change. The transition period from July 9th to 21st is necessary, according to the [relevant authority/organization]. Federal Ministry of Economics, in order to "make necessary technical adjustments at KfW and BAFA".
Heating subsidies will then depend more heavily than before on the applicants' income. The current single-tier system Income bonus It will be three-stage:
1) For incomes up to €30.000 of taxable household income, the bonus increases to 40 percent.
2) For incomes up to €40.000, the bonus remains unchanged and
Operations management
Operations management
Operations management
3) Households with an income of up to 50.000 euros will receive an income bonus of up to ten percent.
Advisory❗Most specialist tradespeople, energy consultants and KfW advisors will now have to familiarize themselves with the newly announced conditions before they can provide comprehensive advice on them shortly.
Anyone who has a valid application confirmation – "(commercial) confirmation of application" ((g)BzA)" – but has not yet submitted the application can still do so under the previous conditions until July 20 (20 p.m.), according to KfW. "KfW will approve these applications under the existing funding conditions, provided all funding requirements are met," the federal government's development bank emphasizes.
But: A confirmation letter (BzA) is not a valid funding application, as the German Heat Pump Association points out. The application must be submitted to KfW as soon as possible.
Und: During the transition phase, no new "confirmations for the application" (gBzA) More will be created.
Applications with existing, but previously unused, application confirmations can be submitted from July 21, 2026, under the new, adjusted funding conditions.
- The basic subsidy remains at 30 percent of the total eligible costs.
- The maximum funding amount is 28.000 euros for the first residential unit (15.000 euros each for the second to sixth residential units, 8.000 euros each for each additional residential unit).
- The maximum subsidy amount for the first residential unit will decrease for the first time on 1 February 2027 and thereafter every six months on 1 February and 1 August of each year by 750 euros.
- Subsidies for owner-occupiers will be differentiated even more strongly according to income than before.
The income bonus can be applied for in addition to the basic funding:
- 40 percent of the total eligible costs for owner-occupiers with an annual household income of up to 30.000 euros,
- 30 percent for annual household income up to 40.000 euros,
- Ten percent for household annual income up to 50.000 euros.
Households with children receive additional support:
The annual household income to be used is reduced by a one-off family allowance of 10.000 euros if there is at least one minor child in the household.
Families with children in the household can receive an income bonus of 40 percent of the total eligible costs with an annual household income of up to 40.000 euros.
- 30 percent of the total eligible costs for households with an annual income of up to 50.000 euros,
- Receive ten percent of the total eligible costs for households with an annual income of up to 60.000 euros.
Minor children living in the household reduce the taxable annual household income by a one-time deduction of 10.000 euros.
For example: For a family with at least one child and a taxable annual household income of €40.000, the family supplement reduces the relevant income to €30.000. This allows the family to apply for the 40 percent income bonus (instead of the 30 percent income bonus without the family supplement). Thus, they would receive a subsidy of up to €22.400 (80 percent of €28.000) for a new heat pump costing €32.000 until January 31, 2027. Source: KfW
Climate speed bonus
The so-called climate speed bonus amounts to 16 percent of the total eligible costs and will decrease for the first time on February 1, 2027, and thereafter every six months on February 1 and August 1 of each year by four percentage points.
Value-added bonus for heat pumps from the EU
A so-called value-added bonus is to be introduced in the first quarter of 2027. The basic subsidy for heat pumps manufactured/built/assembled outside the EU will then decrease to 15 percent. At the same time, heat pumps manufactured within the EU will receive a value-added bonus of 15 percent.
Efficiency bonus and emission reduction surcharge
The efficiency bonus and the emissions reduction surcharge are no longer applicable.
- The maximum funding amount is 28.000 euros for buildings up to 150 m² net floor area (plus 197 euros per m² net floor area for buildings larger than 150 m² up to 400 m², plus 118 euros per m² net floor area for buildings larger than 400 m² up to 1000 m², plus 79 euros per m² net floor area for buildings larger than 1000 m²).
The maximum funding amount will decrease for the first time on February 1, 2027, and thereafter semi-annually on February 1 and August 1 of each year by €750 for buildings up to 150 m² net floor area, by €3 per m² net floor area for buildings up to 400 m², by €2 per m² net floor area for buildings up to 1000 m², and by €1 per m² net floor area for buildings with a larger net floor area. BEG funding for energy-efficient renovation of residential and non-residential buildings.
- The additional bonus of five percent for the efficiency house levels with renewable energy class (EE class) is no longer applicable.
- For the renovation of residential buildings, the maximum funding amount is a uniform 150.000 euros per residential unit.
- The amount of the repayment subsidies granted on the loan amount will be reduced by a flat rate of ten percentage points in each case.
- The subsidy program for local authorities will continue. The amount of the subsidies will also decrease by ten percentage points based on the total eligible costs.
- The bonus for serial renovation of residential buildings, which increases the repayment subsidy, will be extended and granted at a rate of five percent also for serial renovations to the efficiency house (EH) level 70 EE (previously: only for EH levels 40 and 55).
For non-residential buildings, a corresponding [measure/regulation] is required. Bonus for serial refurbishment newly introduced.
Applications for this funding can probably be submitted from the end of September 2026.
Note from KfW: Existing KfW commitments for all the aforementioned funding programs remain valid; the federal funds for these programs are reserved. Applications already received by KfW that have not yet been approved will be reviewed and, if the funding requirements are met, approved as before.
Source: KfW
Federal Minister for Economic Affairs Katherina Reiche: "With the new federal funding, we are creating clarity and planning security. Citizens, businesses, and tradespeople now know which funding applies and what they can rely on. At the same time, we are making the funding more socially equitable. Those who are particularly dependent on support will benefit more in the future. In this way, we are consistently implementing the coalition agreement. The funding will be maintained, used in a more targeted manner, and will also contribute to sound fiscal management. This is good news for everyone who wants to invest in the energy-efficient modernization of their home, and for the trades, which can now once again rely on dependable framework conditions."
Dr. Martin Sabel, Managing Director at German Heat Pump Association"The cuts are pushing the limits of what the heat pump market can withstand. At the same time, it's an important signal that the BEG (German Energy Efficiency Act) will retain its basic structure. For many households, the heat pump remains the right choice. However, given the concurrent changes brought about by the Building Modernization Act, the BEG should be more strongly in favor of renewable heating options. This steering effect must now be achieved even more effectively through electricity prices and CO2 prices."
Michael Hilpert, President of the ZVSHK"The sudden reorganization of the BEG funding program comes as a surprise at a time when reliability and planning certainty are urgently needed. It is particularly problematic that those who implement the funding in practice and talk to citizens about heating system replacements on a daily basis were not involved. Tradespeople know very well what works and what doesn't. Instead of reliability, there is now the threat of more uncertainty, more need for explanation, and even less trust in political reliability. This not only puts a strain on businesses but, above all, unsettles consumers who are facing investment decisions." Read more here
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