Germany cuts heat‑pump subsidies, adds income‑based bonuses in BEG reform

The German government is overhauling the Federal Funding for Efficient Buildings (BEG) programme. From 21 July 2026 the maximum grant for heating‑system replacement falls from €30,000 to €28,000 for the first residential unit, with a scheduled semi‑annual degression of €750 starting 1 February 2027. The overall subsidy rate for most owners will drop, while the efficiency bonus for heat‑pump refrigerants is removed.

To make the scheme more progressive, an income‑based bonus is introduced: owners with taxable household income up to €30,000 receive a 40 % bonus, those earning €30,000‑€40,000 get 30 %, and a new 10 % bonus applies to €40,000‑€50,000. A family surcharge reduces the income threshold by €10,000 for households with minor children. The climate‑speed bonus is cut to 16 % and will halve every six months until it expires in 2029.

The KfW development bank has temporarily shut its online heating‑subsidy portal; new applications can be submitted only after the 21 July transition. Applications already confirmed before 20 July 2026 may still be filed under the old rules. The reforms aim to ease the federal budget while preserving support for low‑income households, but industry groups warn that reduced subsidies could slow the uptake of heat pumps and other renewable heating systems.