BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have reached an agreement to decrease the energy tax on petrol and diesel by 14 cents per litre. When combined with a reduced value-added tax, this package will lower the overall fuel tax burden by approximately 17 cents per litre. The relief is scheduled to be in effect from Oct. 1 until Dec. 31, 2026. The German cabinet has approved the draft legislation for parliamentary review. This package reintroduces a temporary fuel-tax rebate that was used earlier this year as pump prices climbed again.
The new fuel tax relief plan in Germany is expected to provide around €2.5 billion in savings for consumers and businesses. The federal states will contribute €1.25 billion through a fixed share of VAT revenue. Before it can become law, the legislation must be approved by both the Bundestag and Bundesrat. Officials have coordinated with state governments and coalition parliamentary groups. As of Sept. 22, the proposal had not yet completed the parliamentary approval process needed for the scheduled October implementation.
A similar fuel-tax reduction was implemented in Germany during May and June 2026. That measure reduced the energy tax on petrol and diesel by 14.04 cents per litre. The VAT reduction associated with it brought the total tax relief to about 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later confirmed that most retailers passed the reduction onto consumers. This earlier rebate ended on June 30, restoring the normal energy-tax rates prior to the introduction of the current package.
Tax cut aims to ease petrol and diesel expenses
The new measure employs the same basic taxation approach to lower the costs of petrol and diesel. The direct energy-tax reduction is set at 14 cents per litre, while the VAT is also decreased because the taxable retail amount becomes lower when the energy tax declines. Together, these effects result in a total tax reduction of roughly 17 cents per litre. Retail prices may still vary among stations due to wholesale costs, distribution expenses, and individual station pricing strategies.
The federal government announced this package following another significant rise in fuel prices during September. It reported that global oil prices had increased by about 30% amid renewed conflicts in the Middle East and disruptions through the Strait of Hormuz. These developments contributed to higher petrol and diesel costs across Germany. The tax relief applies to both private drivers and commercial entities purchasing road fuel. Its estimated value of €2.5 billion covers the combined relief during the three months ending in December.
Earlier rebate sets recent precedent
The previous rebate was introduced on May 1 and lasted until June 30, reducing energy-tax rates for petrol and diesel over that two-month period. When including VAT, the total reduction matched the current proposal at around 17 cents per litre. That earlier measure was estimated to cause a revenue loss of about €1.6 billion. The October package replicates this relief approach over a three-month span, covering the final quarter of 2026.
The draft legislation designates Oct. 1 as the start date with Dec. 31 as the expiration date. Approval from Parliament remains the final step before it can be put into effect. After the cabinet’s endorsement of the draft, both the Bundestag and Bundesrat will review the measure. The confirmed plan includes a 14-cent reduction in energy tax and a total tax relief of approximately 17 cents per litre. Germany’s states are expected to contribute €1.25 billion toward the overall €2.5 billion cost of this temporary fuel-tax relief.