⚡ In brief: Since July 21, 2026, the new, reduced BEG conditions apply: climate speed bonus 16% instead of 20%, funding cap €28,000 instead of €30,000, efficiency bonus and emission reduction supplement dropped. In return, there is a three-tier income bonus (up to 40%) and a new family allowance. Applications submitted before then are still processed under the old conditions.
⏳ Important for the income bonus: proof submission only possible from January 2027
If you claim the income bonus, you can submit your application right away — but according to KfW, the corresponding proof documents will only be accepted from January 2027. Since the grant is paid out only after the proof of use has been reviewed, the payout is delayed accordingly.
Your funding is not at risk: the approval period runs for 36 months, and the proof of use can be submitted up to six months after that. Do plan, however, for a longer period of pre-financing the measure.
Documents to prepare now: income tax assessments for the second and third calendar year before application (for a 2026 application: 2023 and 2024) — from all relevant adult household members — plus proof of registered residence and a land register extract.
Without the income bonus, proof submission works as usual.
What Happened?
On July 8, 2026, the Federal Ministry of Economics presented the reform of the Federal Funding for Efficient Buildings (BEG); the Bundestag's budget committee has finally approved the key points. The goal is to make funding more socially balanced and efficient — and to save around €2.1 billion in heating subsidies by 2030.
A transition phase for technical adjustments at KfW and BAFA has been in effect since July 9: Until July 20, no new application confirmations (BzA) at KfW and no technical project descriptions (TPB) at BAFA can be created. This affects not only heating subsidies but all BEG products — including KfW's efficiency house and supplementary loans. From July 21, applications are possible again — under the new conditions.
In parallel: the new heating law (GModG)
Almost at the same time as the funding reform, the legal framework changed too: on July 29, 2026 the Building Modernisation Act (GModG) replaced the Building Energy Act (GEG) (promulgated July 28, BGBl. 2026 No. 226). The 65% renewable energy requirement for heating replacement is dropped; instead the bio-ladder starts in 2029. Note: funding and the law are two separate frameworks — the BEG conditions in this article apply regardless of which heating the GModG permits.
GEG becomes GModG — the new heating law at a glance →The New Conditions Compared
Base subsidy
Remains unchanged
Climate speed bonus
Drops by 4 points every six months from Feb 1, 2027 — gone entirely from Aug 1, 2028
Income bonus
Now three tiers: up to €30,000 → 40%, up to €40,000 → 30%, up to €50,000 → 10% taxable household income
Family allowance
New: Minor children in the household reduce the applicable annual income by a one-time €10,000
Maximum eligible costs (1st unit)
Drops by €750 every six months from Feb 1, 2027 — units 2–6: €15,000 each, each additional: €8,000
Efficiency bonus (heat pump)
The bonus for natural refrigerants or geothermal energy is cut — according to the federal government, these technologies are now established in the market
Emission reduction supplement (biomass)
The flat-rate supplement for particularly low-emission biomass heating systems is also cut
Planned from 2027: "Made with Europe" Value Creation Bonus
From the first quarter of 2027, a bonus will be introduced for heat pumps originating in the EU and associated markets. The funding guideline puts it at 15 percentage points — in return, the base subsidy for heat pumps then drops to 15%: European-made units keep their 30%, while the base subsidy for imported units is halved. Details will follow in a forthcoming information sheet.
Renovation Funding Changes Too
The reform affects more than heating replacement. According to the ministry's official key points paper, individual efficiency measures and efficiency house funding also change:
iSFP bonus only from €30,000 minimum investment: The 5% bonus for measures from a renovation roadmap will only be granted above an eligible investment volume of €30,000 — smaller individual measures lose it. Per the funding guideline, the bonus moreover only applies to the cost share above the regular funding cap.
New WPB bonus for insulation measures: From Q1 2027, the 5% bonus for the worst-performing buildings will also apply to individual building envelope measures.
Renewable energy class becomes standard: The 5% EE-class bonus is dropped; in return, eligible costs in the efficiency house base tier rise from €120,000 to €150,000 per residential unit.
Repayment subsidies drop by 10%: Across all efficiency house tiers; EH 85 EE and EH 70 EE no longer receive repayment subsidies, but interest rate reductions remain.
Worked Examples: What Do You Get from July 21?
The bonuses add to the base subsidy, capped at 70% — per the funding guideline, 80% for an applicable income up to €30,000 (with family allowance: up to €40,000 taxable income). Three scenarios show the reform's impact. Assumption in each case: an air-to-water heat pump (investment €32,000) replaces a working gas heater in an owner-occupied single-family home.
Example 1: Household Without Income Bonus
Under old conditions: €15,000 — the reform costs this household €2,120
Example 2: Family with Child, €40,000 Income
Under old conditions: €21,000 — this family receives €1,400 more
Example 3: Couple Without Children, €45,000 Income
Under old conditions: €15,000 (no income bonus above €40,000) — now €680 more
⚠️ Note on the examples: Calculations are based on the BEG EM funding guideline of July 17, 2026 (in force since July 21). The actual subsidy amount depends on your individual case — have your subsidy verified before applying.
Industry Reactions
Industry criticism is pointed: The German Sanitary, Heating and Air Conditioning Association (ZVSHK) complains that the changeover came at short notice and without involving the trades — unsettling consumers in the middle of investment decisions. The Federation of German Heating Industry (BDH) and the German Heat Pump Association (BWP) warn that the gradual cuts could slow investment in climate-neutral heating systems and, without further incentives, push consumers back toward fossil heating.
What You Should Do Now
Already Received a Funding Commitment? Nothing Changes
Funding that has already been committed remains valid in full — the reform only affects new applications. If you have a grant notification or commitment, you can proceed with your project as planned.
Did You Have a BzA or TPB Before July 21?
The grandfathering deadline for applications under the old conditions expired on July 20, 2026 (KfW 8 p.m., BAFA 11:59 p.m.). Anyone who applied in time is still processed under the previous, better conditions. Unused BAFA TPBs are no longer valid and must be recreated. KfW BzAs, however, remain valid for six months from creation — you can still apply with them, then under the new conditions.
Heating Replacement Planned, but No Application Yet?
Since July 21, you can submit applications again — under the new conditions. Important: The climate speed bonus continues to decrease every six months from February 2027, as does the funding cap. The earlier you apply, the higher your subsidy.
Low-Income Households Benefit
Not everyone loses out: Households with taxable income up to €30,000 will receive a 40% instead of 30% income bonus. Combined with the new family allowance, the reform can even mean more funding for low-income families.
Independent Advice Pays Off More Than Ever
Three-tier income bonus, family allowance, decreasing bonuses and caps: The funding landscape is getting more complex. An energy consultation ensures you use the optimal timing and maximum funding for your project.
Timeline
Federal Ministry of Economics presents BEG reform
Transition phase — no new BzA/TPB possible
Final deadline for applications under old conditions with valid BzA/TPB — KfW until 8 p.m., BAFA until 11:59 p.m.
New funding conditions take effect
First reduction: climate bonus −4 points, cap −€750
BMWE announces details of the "Made with Europe" value creation bonus
Value creation bonus for EU-manufactured heat pumps starts
Climate speed bonus expires completely
Note: As of July 31, 2026, based on the BEG EM, WG, and NWG funding guidelines of July 17, 2026, in force since July 21. The Building Modernisation Act (GModG) took effect on July 29, 2026. Details of the value creation bonus will be set out in a forthcoming information sheet. This article does not replace individual consulting.
Unsure What the Reform Means for You?
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