EV incentive scheme applies retroactively from 1 January 2026

Following a last-minute cancellation on Friday, further details of the incentive scheme have now been announced. More on the reasons for the delay will follow shortly. First, here are the key facts:

• As previously announced in late November, the income threshold is set at €80,000 euros of taxable annual household income. This threshold increases by €5000 euros per child, up to a maximum of €90,000 euros of taxable annual household income. The new aspect here is the cap at €90,000 euros, which means the income threshold is fixed for households with two or more children.
• The base incentive is €3,000 euros—but, as Schneider has now confirmed, this applies only to battery-electric vehicles. For plug-in hybrids and vehicles with range extenders, the base amount is €1500 euros.
• Households with a child under 18 continue to receive an additional €500 euros in funding. As previously announced, this supplement is capped at €1,000 euros—meaning no further supplement is granted from the third child onwards.
• The incentive programme initially included one social tier with an additional €1000 euros in funding. However, there are now two tiers: households with a taxable annual income of up to €60,000 euros receive an additional €1000 euros, while those with an income of up to €45,000 euros receive a €2000-euro supplement. This means the maximum funding amount can increase to €6000 euros in some cases, whereas the initial figures from late November suggested a maximum of €5,000 euros.

You can find the exact funding amounts in the tables below:

For the purchase of a purely battery-electric vehicle:

For the purchase of an eligible plug-in hybrid or electric vehicle with a range extender:

Important: All eligible vehicles registered as new since 1 January 2026 qualify for the incentive. “For those who have been waiting, we can now confirm: you can proceed, as the incentive applies retroactively from 1 January 2026,” Schneider said at the press conference in Berlin. Applications can even be submitted up to one year after the vehicle’s registration, according to the SPD politician.

However, applications are not yet possible. The federal government aims to use the press conference to provide early information on the now-finalised key points, in order to address potential buyer hesitation with the retroactive incentive. Negotiations on the implementation of the scheme are still ongoing. Whether it will be administered via the BAFA—as was the case with the environmental bonus—has not yet been confirmed by Schneider. The application portal is expected to go live in the second quarter, likely in May. To shorten processing times and reduce administrative effort, the process is intended to be as digitalised as possible. All required documents and information should be submittable in digital form.

2023 and 2024 tax assessments are important

Proof of income is naturally required for the income threshold. “The amount of taxable income is calculated as the average of the two most recent tax assessments, which may not be older than three calendar years. For an application submitted in early 2026, you can therefore use the average taxable income from the 2024 and 2023 tax assessments,” explains the Ministry of the Environment in an FAQ on the incentive scheme. “For married applicants, those in registered civil partnerships, or those in cohabiting relationships, the taxable income of the partner is added (unless already jointly assessed in the applicant’s tax assessment). Details of the calculation basis, the procedure for applicants without a tax assessment, and the precise consideration of children will be published shortly as part of the funding guidelines.”

For ‘cohabiting relationships’—couples without marriage—the taxable household income is combined. Additionally: “If you are not required to submit a tax return and have not done so for previous years, you may submit one retrospectively. Pensioners without a tax return can provide a pension statement and a self-declaration of other income.”

The income threshold of €80,000 euros was chosen as it represents the median income of new car buyers, based on data from the ‘Mobility in Germany’ survey. “This means the lower half of those who have purchased a new car in recent years can benefit from the new incentive,” Schneider explains. “The tiered structure prevents windfall effects and ensures that funding reaches those who truly need the support.”

The Minister justified the restriction of the incentive to new vehicles by pointing to the still underdeveloped used car market. However—it is also implied—this is intended to benefit the automotive industry, which gains only from new vehicle sales. “With this incentive programme, we aim to make a difference for the environment, for our European automotive industry, and for households that could not previously afford an electric car without support. After the federal government has already done much to make electric cars attractive as company cars, this programme specifically supports private individuals,” said Schneider. “This is a strong boost for electromobility in Germany. And it is a boost for our domestic automotive industry, which offers strong electric vehicles.” Although he did not name specific brands, he indicated that upcoming models from German manufacturers could, with the incentive, be priced below €20,000 euros—likely referring to the upcoming small car family from the VW Group, including the ID. Polo.

The last-minute cancellation of Friday’s press conference was attributed to further internal coordination within the federal government. Schneider now explains that the discussions primarily focused on the definition of plug-in hybrids and range extenders. “Sometimes it takes time to discuss these details thoroughly,” said the Minister, who also referred to the “global situation” and the events surrounding Greenland—there were certainly more pressing issues in political Berlin over the weekend.The outcome of the discussions on PHEVs and EREVs: such part-time electric vehicles are eligible if they emit no more than 60 grams of CO2 per kilometre and have an electric range of at least 80 kilometres—both values based on type-approval data. “To my knowledge, there is currently only one manufacturer that meets these criteria for range extenders,” Schneider noted. Additionally, the incentive for part-time electric vehicles is limited to new registrations until 30 June 2027—i.e., for a year and a half. “From 1 July 2027 onwards, the federal government will assess whether to continue funding plug-in hybrids and range-extender vehicles based on their real-world CO2 emissions, to maximise their contribution to climate protection and encourage the greatest possible use of electric drive,” states the FAQ. An extension of the incentive is therefore possible but has not yet been decided.

Minimum holding period of three years

Additionally, regardless of the drive type, there is a minimum holding period of 36 months from the date of first registration, whether the vehicle is purchased or leased. “The incentive is specifically aimed at private individuals who intend to use the vehicle in their daily lives. Without a holding period, for example, cars could be purchased with the incentive and immediately resold for profit,” the Ministry explains.

Initially, all new vehicles in the M1 vehicle class with the corresponding drive system are eligible, though this may change. “The inclusion of so-called EU preference regulations is under review. These requirements may be integrated into the ongoing incentive programme at a later date. The Federal Ministry for the Environment will inform consumers in good time before any such changes come into effect,” the Ministry states.

With the known budget of three billion euros from the Climate and Transformation Fund, the incentive is expected to cover around 800,000 vehicles over the next three to four years, according to Schneider. However, due to varying incentive amounts depending on drive type, income, and family circumstances, the exact figure cannot be determined. Whether the budget will last three to four years cannot yet be confirmed—it is also possible that the fund could be exhausted more quickly if demand is significantly higher.

The federal government has deliberately chosen not to involve manufacturers in the incentive scheme—unlike the previous environmental bonus—to keep the programme as low in bureaucracy as possible. “I have spoken to all major manufacturers to inform them of the key points—not to negotiate with them,” Schneider said at the press conference. He does not share concerns that the incentive might primarily benefit manufacturers through reduced discounts rather than customers: “I trust that the industry will act in its own interest.”

Initial reactions from the electromobility sector are positive. “This gives households with low and middle incomes the opportunity to switch to electric drives and benefit from the lower running costs of these vehicles,” says Martin Roemheld, CEO of EnBW mobility+ AG & Co. KG. “This is socially balanced and strengthens a market that still needs impetus.” To further enhance this effect, EnBW considers incentives for used electric vehicles a sensible addition. At the same time, EnBW—unsurprisingly—points out that electromobility “can only succeed if the growth of vehicles and charging infrastructure continues hand in hand.”

Source: Livestream of the press conference, bundesumweltministerium.de (Press Release), bundesumweltministerium.de (FAQ), Information via email (EnBW reaction)