⚡ In brief: Heating replacement is the single renovation measure with the highest subsidy. Base rate 30%, climate speed bonus 16%, income bonus up to 40% — capped at 70%, or 80% for an applicable income up to €30,000. First sign a contract with a protective clause, then submit the KfW application.
🔄 Update (July 21, 2026): The new BEG conditions have applied since July 21, 2026 (funding guideline of July 17, 2026) — climate speed bonus 16% instead of 20%, funding cap €28,000, efficiency bonus and emission reduction supplement dropped, new three-tier income bonus with family allowance. The figures in this article reflect the new rules. All details on the BEG reform →
Why Heating Replacement Is So Heavily Subsidized
Around 80% of energy consumption in German residential buildings goes to heating and hot water. Switching from fossil to climate-friendly heating systems is therefore the most effective lever for reducing CO₂ emissions in the building sector. The government subsidies reflect this priority.
The Federal Funding for Efficient Buildings — Individual Measures (BEG EM) is administered through KfW. For heating replacement, several bonuses can be combined — up to a total subsidy of 80%.
Base Subsidy: 30% for Everyone
The base subsidy of 30% is available to all homeowners who switch to a climate-friendly heating system. Eligible systems include:
- Heat pumps (air-to-water, brine-to-water, water-to-water)
- Biomass heating (pellets, wood chips, log boilers)
- Solar thermal (as heating support)
- Connection to a heating network (district heating)
- Hybrid heating systems with renewable component
The 30% applies to eligible costs up to a maximum of 28,000 EUR for the first residential unit (since the BEG reform of July 21, 2026, previously 30,000 EUR) — meaning up to 8,400 EUR in subsidy from the base rate alone.
Climate Speed Bonus: +16%
In addition to the base subsidy, there is the climate speed bonus of 16% (since the BEG reform of July 21, 2026, previously 20%). This is available to owner-occupiers who replace a functioning oil, coal, gas floor, or night storage heater — or a central gas or biomass heater that is at least 20 years old.
Important: The climate speed bonus of 16% drops by 4 percentage points every six months from February 1, 2027, and expires completely from August 1, 2028. If you want the full bonus, act now.
Income Bonus: Up to +40% for Households Under 50,000 EUR
Since the BEG reform of July 21, 2026, the income bonus for owner-occupiers has three tiers: 40% for a taxable annual household income up to 30,000 EUR, 30% up to 40,000 EUR, and 10% up to 50,000 EUR. Also new is the family allowance: if minor children live in the household, the applicable income is reduced by a one-time 10,000 EUR. The relevant figure is the average taxable income of the second and third year before application — evidenced by the corresponding income tax assessments.
The income bonus can be combined with the base subsidy and the climate speed bonus. Per the funding guideline, the cap is 70% — rising to 80% only for an applicable income up to €30,000 (i.e., the 40% tier).
⏳ Note: proof submission only possible from January 2027
If you claim the income bonus, KfW expects to accept the corresponding proof documents only 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 itself is not lost (36-month approval period plus a six-month window for the proof). Plan for the longer pre-financing period.
Efficiency Bonus and Emission Reduction Supplement: Dropped Since July 21, 2026
Until July 20, 2026, there was an additional 5-percentage-point efficiency bonus for heat pumps with a natural refrigerant (e.g. propane R290) or using geothermal energy, groundwater, or wastewater as the heat source — plus a flat €2,500 emission reduction supplement for particularly low-emission biomass heating.
With the BEG reform, both technology-specific bonuses are dropped for applications from July 21, 2026 — according to the federal government, these technologies are now established in the market. Efficient units of course still pay off — through lower operating costs.
Maximum Subsidy: 80% on 28,000 EUR
Calculation Example
For each additional residential unit in the same building, eligible costs increase by 15,000 EUR (2nd–6th unit) or 8,000 EUR (from the 7th unit). Note: The cap for the first residential unit decreases by 750 EUR every six months from February 1, 2027.
Heating Systems Compared
Heat Pump
Base rate 30% + climate speed and income bonus combinable. From Q1 2027, an additional value creation bonus for EU-manufactured heat pumps is planned. Highest total subsidy of all heating systems.
Max subsidy rate: 80%Pellet Boiler / Biomass
Base rate 30% + climate speed bonus and income bonus combinable. The former 2,500 EUR emission reduction supplement for particularly low-particulate systems has been dropped since the BEG reform of July 21, 2026.
Max subsidy rate: 80%Hybrid Heating (e.g. Heat Pump + Gas)
Only the renewable component (e.g. the heat pump) is eligible. The fossil heat generator (gas boiler) is not subsidized. Base rate and bonuses apply to the eligible portion.
Subsidy rate: proportional, up to 80%District Heating Connection
Base rate 30% + climate speed bonus and income bonus combinable. Connection costs and the transfer station are eligible.
Max subsidy rate: 80%The Application Process: Contract with Protective Clause First, Then KfW Application
Heating replacement subsidies are applied for through KfW — not BAFA. Important: You first sign a contract with the contractor that includes a suspensive or resolutory condition. This means the contract only takes effect once KfW approves the funding. Then you submit the KfW application.
⚠️ A contract without a suspensive or resolutory condition counts as project start and leads to subsidy exclusion. The clause must be included from the beginning — adding it later is not permitted.
Process in 5 Steps
Note: Hiring the energy consultant and pure planning services do not count as project start and can be done at any time before the application.
GModG Reform: 65% Obligation Dropped — Subsidies Remain
With the new Building Modernisation Act (GModG), the previous obligation to use at least 65% renewable energy when replacing a heating system is dropped. Homeowners may continue to install fossil heating systems.
However: Subsidies remain available only for climate-friendly heating systems. Anyone installing a new oil or gas boiler receives no subsidy — and must expect the bio-ladder from 2029 (increasing obligation to blend in climate-friendly fuels). Switching to renewable heating is therefore more worthwhile than ever in 2026.
Tip: Secure an Additional 5% with iSFP
The individual renovation roadmap (iSFP) gives you an additional 5% iSFP bonus for individual measures on the building envelope (insulation, windows, doors). This bonus does not apply directly to heating replacement — but if you are renovating anyway, you can claim the 5% for accompanying measures.
Example: Heating Replacement + Window Replacement
You replace your 25-year-old gas boiler with a heat pump (70% subsidy) and simultaneously renew the windows (15% base subsidy + 5% iSFP bonus = 20%). This way you maximize the total subsidy and sustainably reduce heating and utility costs.
Note: All information refers to BEG funding guidelines following the reform of July 21, 2026 (as of July 2026). Changes due to the GModG or adjusted KfW conditions are possible. This article does not replace individual consulting.
Planning a Heating Replacement? We Can Help.
From heating consultation to subsidy application to construction supervision — we guide you through the entire process.