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 the reduced value-added tax, this package is expected to lower the overall tax on fuel by approximately 17 cents per litre. The proposed relief will be effective from Oct. 1 through Dec. 31, 2026. The cabinet has already approved the draft legislation for parliamentary review. This initiative revitalizes a temporary fuel-tax rebate that was previously used earlier this year, as fuel prices increased once again.
A total relief of around €2.5 billion for consumers and businesses is anticipated from Germany’s new fuel tax relief scheme. The federal states will contribute €1.25 billion through a fixed portion of VAT revenue. Before becoming law, the legislation still needs approval from both the Bundestag and Bundesrat. Authorities have coordinated the measure with state governments and coalition parliamentary groups. As of Sept. 22, the proposal had not yet completed the necessary parliamentary approval process to enable the scheduled October implementation.
Germany previously employed a similar fuel-tax reduction during May and June 2026. This measure cut the energy tax on petrol and diesel by 14.04 cents per litre. The VAT reduction associated with it brought total tax relief to roughly 17 cents per litre. The Federal Cartel Office and the Independent Monopolies Commission later determined that retailers largely passed the savings onto consumers. That rebate concluded on June 30, returning energy-tax rates to their normal levels before the current package was developed.
Tax reduction aims to lower petrol and diesel expenses
The new policy maintains the same basic taxation approach to reduce costs for petrol and diesel. The direct energy-tax cut is set at 14 cents per litre. Additionally, VAT is decreased because the taxable retail amount declines along with the energy tax reduction. This combined effect results in an approximate 17 cents per litre overall tax reduction. Retail prices at filling stations can still vary, as they also depend on wholesale costs, distribution expenses, and individual station pricing strategies.
The federal government announced the package following a sharp rise in fuel prices during September. It attributed this increase to world oil prices climbing by about 30%, driven by renewed Middle East conflicts and disruptions through the Strait of Hormuz. These factors contributed to higher petrol and diesel costs across Germany. The tax relief applies to both private drivers and commercial entities purchasing road fuel. Its €2.5 billion value reflects an estimated total relief over the three months ending in December.
Recent rebate as a reference point for current relief
The previous rebate, which started on May 1 and lasted through June 30, lowered energy-tax rates for petrol and diesel for two months. Including VAT, the reduction was approximately 17 cents per litre, matching the scope of the current proposal. That earlier initiative led to estimated tax revenue losses of around €1.6 billion. The October package extends the same general form of relief over three months, covering the final quarter of 2026.
The draft sets October 1 as the intended start date and December 31 as the end date. Final legislative approval from parliament remains necessary before the measure can be enacted. After cabinet approval of the draft, the Bundestag and Bundesrat will review it. The confirmed plan provides a 14-cent reduction in energy tax and approximately 17 cents per litre in total tax relief, with Germany’s states contributing €1.25 billion toward the overall €2.5 billion cost of the temporary fuel-tax reduction.