Handwerkerleistungen and the heat-pump grant: what you get back in Germany (2026)

Germany gives you 20% of a tradesman’s labour back on your tax return: §35a, the Handwerkerbonus, capped at €1,200 a year. It is the everyday lever, the German cousin of Sweden’s ROT. For a heat pump, though, the real money is elsewhere, in the KfW grant worth up to €21,000, and the two cannot be stacked on the same job. A third route, the §35c deduction, excludes both. Knowing which lever to pull, and when, is the whole game. Source: §35a EStG, gesetze-im-internet.de

§35a: 20% of a tradesman’s labour

Start with the lever you use most. §35a takes 20% of the labour cost of work in your home off your income tax, up to €1,200 a year. That ceiling is 20% of €6,000 of labour, so once a year’s tradesman labour passes €6,000 the extra returns nothing. It covers almost any repair, maintenance, or modernisation: a plumber, an electrician, a heating service, a painter, a chimney sweep.

Two conditions are strict, and the tax office enforces both. The invoice has to split the labour from the materials, because only the labour qualifies; a flat invoice with one total is refused. And you have to pay into the company’s bank account, by transfer: a cash payment, even with a receipt, disqualifies the whole amount. Get the labour line itemised on the quote and pay every tradesman by transfer, and the deduction is automatic at your next return.

The heat-pump grant dwarfs it: up to €21,000

For a heat pump, §35a is the wrong tool. The KfW 458 Heizungsförderung pays a grant on the installation that starts at 30% and climbs with bonuses: 20% for ripping out an old fossil system (oil, coal, or night-storage at any age, or a functioning gas boiler at least 20 years old; applications through the end of 2028), 30% if your household taxable income is €40,000 or less, and 5% for an efficient or natural-refrigerant unit. The bonuses are capped at 70% combined, applied to eligible costs of up to €30,000 for a single home, so the largest possible grant is €21,000.

The grant is applied for around the time you sign the contract, through KfW, before the work is done and paid, which is the opposite of §35a’s claim-it-later-on-your-return rhythm. The programme is funded in 2026, but it sits under the planned reform of the Heizungsgesetz (GEG), so the conditions can move. Check the current terms at kfw.de before you sign anything, and date your budget to the version you confirmed.

You cannot stack them: pick the biggest lever

This is where the money is won or lost, and the law is explicit on each pairing. §35a does not apply to work that is publicly funded with a subsidised loan or a tax-free grant, so the heat-pump cost the KfW grant covers cannot also go on your tax return under §35a. §35c, the energy-renovation deduction, is barred whenever you use §35a or public funding for the same measure. The three levers are mutually exclusive on one job, not a stack.

So you choose, per measure, the single biggest return. For the heat pump that is the grant, every time the numbers are run: €21,000 against §35a’s €1,200 is not a close call. §35a is then free to do its real job, the unsubsidised work the grant ignores. This is the kind of bookkeeping a maintenance record is built to keep straight: which job took the grant, which is left for §35a, and the €6,000 labour ceiling you have not yet used this year. appkeep holds that against each component so the right lever is obvious at invoice time rather than reconstructed at your tax return.

§35c is the case for the patient. It returns 20% of an energy measure over three years (7%, 7%, then 6%), up to €40,000 per home, counts materials as well as labour, and needs a home older than ten years. It beats the grant only when you cannot use the grant, since the grant returns more and returns it now.

Worked example: Lena in Augsburg

Lena replaces a 22-year-old gas boiler with an air-to-water heat pump. The installed cost is €28,000. She also has a plumber re-pipe a bathroom the same year, €1,500 of labour, unrelated to the heat pump.

For the heat pump she takes the KfW grant. Her gas boiler is past 20 years old, so replacing it earns the 20% speed bonus on top of the 30% base; her income is above the bonus threshold, so 50% of the €28,000 comes back as a grant: €14,000. She does not put any of the heat-pump labour on her tax return, because §35a is closed to grant-funded work.

The bathroom re-pipe is separate and unsubsidised, so it runs under §35a: 20% of the €1,500 labour, €300, off her next tax return. Her total back is €14,300, from two levers kept deliberately apart. Had she tried to claim the heat-pump labour under §35a as well, the claim on that part would have been refused and the return reopened.

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Related guides

• What a boiler replacement costs: the heat-pump install the KfW grant sits underneath.
• Repair or replace: the maths that decides: the annual-cost comparison the grant and the deduction feed into.
• ROT-avdrag, kotitalousvähennys, and the Dutch ISDE: how Sweden, Finland, and the Netherlands handle the same question.

Glossary terms used in this guide

• Glossary: Component: the heat pump or boiler as a distinct element with its own grant and lifespan.
• Glossary: Mandate: the budget ceiling you set before the installer starts.