New Heating Subsidy: More Money for Families, Less for Middle Incomes

What is new is that the presence of minor children shifts the income threshold: "For households with at least one minor child, the taxable annual income relevant for the funding is reduced by a one-time amount of 10,000 euros." As a result, families benefit more than before.

At the same time, the so-called climate speed bonus, which rewards the rapid replacement of old fossil-fuel heating systems, is being reduced. "The bonus is now at a maximum of 16 percent (previously it was 20 percent)." It is to be further reduced in the coming years and eliminated entirely in 2028.

Declining Cost Cap

The maximum eligible costs have also decreased: "Instead of 30,000 euros, only 28,000 euros of the costs for the heating replacement will now be considered." This amount is to be further reduced every six months, by 750 euros each time, until an eligible sum of 22,000 euros is reached by 2030. The state covers a maximum of 80 percent of these costs.

Federal Minister for Economic Affairs Katherina Reiche (CDU) points, among other things, to a "contribution to solid budgetary management" as the reason for the adjustments. The money for the heating replacement subsidy does not come from the regular federal budget, but from the Climate and Transformation Fund (KTF), which is to receive additional debt-financed money from a special pot for investments in infrastructure and climate neutrality. At the same time, a portion of the regular revenues from emissions trading is to flow into the core budget. This applies to all ministries given the difficult budgetary situation.

Heat Pumps Remain Eligible for Funding

Anyone who has a heat pump installed can continue to count on government funding. "Der zweite Vorteil liegt darin, dass der Einbau einer Wärmepumpenanlage vom Staat gefördert wird." This will continue to be the case, says Niklas Roßbach, a master heating installer from Mönchengladbach. The main advantage of heat pumps, he says, is that they are climate-friendly because they operate without fossil energy sources such as gas or oil.

The Rose couple, who commissioned Roßbach, decided in favor of a heat pump after purchasing their house. The old oil heating was removed. However, Roßbach criticizes the fact that the funding rules have changed several times in recent years. He particularly cares about long-term planning reliability "so that er Kunden vernünftig beraten könne."

Application and Consultation

Another change concerns the origin of the heat pump. "Ab 2027 ist geplant, die Förderung nochmal anzupassen - je nachdem, ob die neue Wärmepumpe in der EU hergestellt worden ist oder zum Beispiel aus China kommt." Those who opt against an EU-made heat pump are to receive less funding. The aim is to "Wertschöpfung, Beschäftigung und technologische Souveränität in Deutschland und Europa sichern und unterstützen," according to the Federal Ministry for Economic Affairs.

Applications continue to be processed via KfW, whose application portal has been adjusted in accordance with the new guidelines. The prerequisite is a "Bestätigung zum Antrag," or BzA for short. This certification is generally issued by an energy consultant or a specialist company. Anyone who still has an old BzA may continue to use it, but only under the new conditions.

In addition to the possible federal-level subsidies, depending on the place of residence, funding programs from the federal states or municipalities may also come into consideration. However, these are often quickly exhausted. The Consumer Advice Center NRW recommends obtaining independent energy advice regarding federal funding before making a decision.

Christian Handwerk, a specialist for energy-efficient construction and building physics at the Consumer Advice Center NRW, as well as energy consultant Petra Kerstan, are available for corresponding consultations. Anyone planning to install a climate-friendly heating system can submit a new funding application from July 21, 2026.

The program is part of the Federal Funding for Efficient Buildings (BEG). In addition to the IW expert opinion press release, interviews with Handwerk and Roßbach also contributed to the reporting. The new rules are likely to be adjusted regularly over the coming years — applicants should therefore inform themselves about the current status before any measure.