Heating subsidies 2026: what the new law means for your heating
New Building Modernization Act, new KfW rates since 21 July — and the honest answer to the question: gas or heat pump?
The essentials at a glance:
- Since 29 July 2026 the new Building Modernization Act (GModG) has been in force — it replaces the previous heating law (GEG). The 65-percent renewables requirement is gone; the choice of heating is free again.
- The state heating subsidy continues — but with new conditions since 21 July 2026: the climate speed bonus drops from 20 to 16 percent and keeps shrinking every six months thereafter.
- For low-income households it gets better: up to 80 percent subsidy, a maximum of €22,400 for a single-family home.
- New gas and oil heating systems still receive no subsidy — and from 2029 a mandatory admixture of bio fuels that makes heating with gas progressively more expensive.
- Our verdict upfront: if you are planning a heating replacement anyway, an early application pays off — every additional half-year costs bonus percentage points.
The new law: free choice of heating — with a price tag
On 28 July 2026 the Building Modernization Act was published in the Federal Law Gazette; it has been in force since 29 July. The much-debated "heating law" of 2024 is history. The key changes:
- Free choice of heating: the requirement that new heating systems must run on at least 65 percent renewable energy has been scrapped. All systems are permitted again — from heat pumps to hybrid and biomass heating to gas or oil heating.
- The "bio ladder": anyone installing a new gas or oil heating system must co-fire a share of bio fuels or hydrogen — at least 10% from 2029, 15% from 2030, 30% from 2035 and 60% from 2040. From 2045 fuels must be completely climate-neutral.
- More personal responsibility: the mandatory consultation before installing a fossil heating system has been dropped. The responsibility for whether gas pays off in the long run now lies entirely with the owner.
In short: nothing is banned — but fossil heating gets a clear, legally fixed price tag that grows year after year.
The subsidy from 21 July 2026 in detail
The heating subsidy via KfW program 458 remains in place — with modified components. Applications are still filed via the "Meine KfW" portal, and strictly before the project begins (a supply or service contract with a suspensive condition may already exist — exactly where we support you with the paperwork).
- Base subsidy: 30% — unchanged for all owners if the new heating runs predominantly on renewables (e.g. heat pump, biomass, district heating connection).
- Climate speed bonus: now 16% (previously 20%) for owner-occupiers replacing a working fossil heating system. Note, the bonus melts away: 12% from February 2027, 8% from August 2027, 4% from February 2028 — from August 2028 it is gone entirely.
- Income bonus newly tiered (owner-occupiers only, taxable household income): up to €30,000 40%, up to €40,000 30%, up to €50,000 10%. New is the family allowance: per household with at least one minor child, the countable income is reduced by a flat €10,000.
- Dropped: the 5% efficiency bonus (natural refrigerants) and the €2,500 emissions reduction grant have been scrapped without replacement.
- Eligible costs: now a maximum of €28,000 for the first housing unit (previously €30,000).
- Cap: still 70% — for households entitled to the highest income bonus tier, now up to 80%.
What does that mean in euros? The typical case — an owner-occupier swapping an old gas heating for a heat pump — comes to 30% + 16% = 46% subsidy, i.e. up to around €12,900. Low-income households reach up to €22,400 (80% of €28,000).
Gas or heat pump? Our honest assessment
Customers ask us this question almost daily at the moment — here is our straight talk:
Gas heating is fully permitted again and initially cheaper to buy. But it carries three cost risks that can no longer be argued away in 2026: the CO₂ price (in a corridor of €55–65 per tonne in 2026, from 2027 in the European emissions trading scheme ETS 2 without a price cap), the bio ladder from 2029 with more expensive bio fuel shares — and rising grid fees as gas grids are spread across fewer connections. There are no subsidies.
The heat pump costs more to buy but is heavily subsidized — after subsidies it ends up at the level of a new gas heating system or below in many existing buildings. In operation it extracts three to four times as much heat from one kilowatt-hour of electricity and is practically unaffected by the CO₂ price. Calculated over 15 to 20 years it is the more economical solution in the vast majority of single-family homes — which matches our experience from more than 2,000 heating projects.
When gas is still worth considering: as a hybrid solution in buildings that are hard to renovate, as a bridge when a district heating connection is foreseeable — or when the budget currently leaves no room. We say that honestly too, instead of selling everyone a heat pump across the board.
Our recommendation: if you are planning the swap, don't wait for better conditions — the direction of the subsidies points down, not up. The climate speed bonus loses 4 percentage points every six months from February 2027.
And what applies here in Landstuhl and the Western Palatinate?
In parallel with the new law, municipal heat planning is under way: municipalities below 100,000 inhabitants — including Landstuhl and the surrounding districts — must present a heat plan by 30 June 2028. From it you will later be able to read whether your street has a district heating perspective or will be supplied decentrally (heat pump, biomass) for good.
In practical terms: for the vast majority of one- and two-family homes in our region there will be no district heating — the decision is between heat pump, hybrid and gas with the bio ladder. We know the local conditions and tell you concretely after an on-site visit what works in your building.
How to proceed now:
- Get a subsidy estimate — takes 60 seconds with our subsidy guide.
- On-site visit: we check the building, heat load and radiators — honestly, without sales pressure.
- Written quote — billed by actual effort.
- You file the KfW application before the project begins — we supply all the technical documents for it.
As of 1 August 2026. Basis: Building Modernization Act (Federal Law Gazette 28 July 2026) and BEG subsidy directive with conditions from 21 July 2026 (KfW grant 458). All information without guarantee — the applicable subsidy directives prevail; we review your case individually.
Transparency note on AI content: the cover image and the illustrations marked "AI-generated illustrative image" in this article were created with the help of artificial intelligence (labelled in accordance with Art. 50 of the EU AI Act — Regulation (EU) 2024/1689). They show no real persons, customers or properties. The text and technical content were written and reviewed editorially.