BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have agreed to cut the energy tax on petrol and diesel by 14 cents per litre. Including lower value-added tax, the package would reduce the total tax burden on fuel by about 17 cents per litre. The relief is scheduled to run from Oct. 1 through Dec. 31, 2026. Germany’s cabinet has approved the draft measure for parliamentary consideration. The package revives a temporary fuel-tax rebate used earlier this year as pump prices rose again.
As of late September, Germany’s fuel tax relief plan involves a total benefit of approximately €2.5 billion for consumers and businesses. The federal states will contribute €1.25 billion through a fixed portion of VAT revenue. The legislation must still receive approval from both the Bundestag and Bundesrat before it can come into effect. Officials coordinated the proposal with state governments and coalition parliamentary groups. By September 22, the plan had not yet completed the necessary parliamentary approval process for an October implementation date.
Germany previously employed a similar reduction in fuel taxes during May and June 2026. That initiative lowered the energy tax on petrol and diesel by 14.04 cents per litre. The related VAT cut resulted in a combined tax relief of roughly 17 cents per litre. Later, the Federal Cartel Office and Independent Monopolies Commission found that retailers largely passed on the benefits to consumers. That rebate ended on June 30, restoring the regular energy-tax rates before the latest package was drafted.
Tax cut aims to reduce petrol and diesel expenses
The upcoming measure relies on the same fundamental tax mechanism to lower fuel costs. The direct energy-tax reduction of 14 cents per litre is complemented by a decrease in VAT, since the taxable retail amount drops as energy taxes decrease. This combined effect results in an overall tax relief of approximately 17 cents per litre. Still, fuel prices may vary among filling stations due to differences in wholesale costs, distribution expenses, and individual station pricing strategies.
In late September, the federal government announced the plan following another sharp increase in fuel prices. They stated that global oil prices had surged by about 30% amid renewed Middle East conflict and disruptions through the Strait of Hormuz. These developments coincided with higher petrol and diesel prices across Germany. The €2.5 billion tax package benefits both private drivers and commercial entities purchasing road fuel, representing an estimated total relief over the three months ending in December.
The previous rebate sets a recent precedent
The earlier rebate, introduced on May 1 and in effect through June 30, reduced energy-tax rates for petrol and diesel for two months. When including VAT, the total reduction was around 17 cents per litre, matching the amount proposed now. That rebate resulted in estimated tax revenue losses of about €1.6 billion. The current plan extends a similar form of relief across the last quarter of 2026, lasting three months.
The draft sets October 1 as the start date and December 31 as the end date. Final approval from the legislative bodies is necessary before the measure can be implemented. The Bundestag and Bundesrat will review the proposal after the cabinet’s approval. The confirmed package includes a 14-cent reduction in energy taxes and an overall tax relief of about 17 cents per litre. Germany’s states will contribute €1.25 billion toward the total €2.5 billion cost for this temporary fuel-tax relief.