In the past, incentives for purchasing electric cars have been introduced, eliminated, or drastically altered on several occasions. The generous environmental bonus has been eliminated. Government incentives for plug-in hybrid vehicles were also temporarily eliminated. Businesses continue to benefit exclusively from tax benefits. Since 2026, there has been a new subsidy program for private households, although eligibility for the subsidies depends on income level.
Funding Opportunities for Businesses: Companies that purchase an electric car as a company car can claim an accelerated depreciation of 75% in the year of purchase and, in subsequent years, 10%, two installments of 5%, 3%, and 2% (known as the “investment booster”). The depreciation period totals 6 years. All companies that have purchased or will purchase a fully electric vehicle or a fuel cell vehicle between June 30, 2025, and January 1, 2028, are eligible for this benefit.
In addition, the monetary benefit for personal use is calculated monthly not at 1%, but only at 0.25% of the gross list price. A plug-in hybrid also offers tax benefits because only 0.5% of the gross list price is used as the tax base for private use each month. However, these benefits apply only to electric company cars purchased after June 30, 2025, and with a gross list price not exceeding €100,000.
Funding Opportunities for Individuals: Starting in May 2026, private buyers can apply for a new government electric vehicle incentive. This applies retroactively to new registrations dating back to January 1, 2026. In this way, lawmakers are encouraging the purchase of all-battery electric cars, by Plug-in hybrids as well as vehicles with Range Extender. Only households with a taxable income of no more than 80,000 € are eligible for this subsidy. This income limit is increased by €5,000 for families with up to two children under the age of 18, bringing the maximum to €90,000. The grant is awarded only once per person, and no more than two applications may be submitted per household.
The base subsidy for all-electric cars is €3,000. Plug-in hybrids and vehicles with range extenders are eligible for a subsidy of €1,500. In addition, there is a €500 child supplement for up to two children. Households with an income of less than €60,000 receive an additional supplement of €1,000. Those with a taxable annual household income of less than €45,000 receive an additional €1,000. This means a subsidy of up to €6,000 is available for fully electric cars and €4,500 for plug-in hybrids. Important! The subsidies are paid only when purchasing a new car. This applies to both purchases and leases. Used vehicles are not eligible for the subsidy.
Applying for Funding
Applications for the electric vehicle subsidy must be submitted through the German Subsidy Center at the Federal Office for Economic Affairs and Export Control (BAFA). For this purpose, the vehicle’s registration—which must have already taken place—is decisive for the applicant. From that date, applicants have one year to submit the application using the electronic application form. It is essential that all required documents be submitted in full. Otherwise, the agency will not process the application.
In addition to the vehicle identification number, applicants need their last two tax assessment notices. These must be no more than three years old. Those who were not required to file a tax return may voluntarily file one retroactively in order to obtain the necessary tax assessment notices. Families who wish to claim the child supplement must also include proof of child benefit from the family benefits office. Buyers of plug-in hybrids additionally need an EU certificate of conformity to prove an electric range of at least 80 kilometers.
Anyone submitting a grant application must authenticate themselves using BundID. Therefore, an ID card with online functionality, the corresponding PIN, and the ID Card app are required. However, applicants may use their ELSTER certificate as an alternative.
Exemption from Motor Vehicle Tax: Newly registered electric cars are also exempt from vehicle tax for a maximum of ten years.