BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have agreed to lower the energy tax on petrol and diesel by 14 cents per litre. When combined with reduced value-added tax, this package is expected to cut the total fuel tax burden by about 17 cents per litre. The tax relief is planned to last from Oct. 1 to Dec. 31, 2026. Germany’s cabinet has approved the proposal for parliament’s review. This initiative brings back a temporary fuel-tax rebate used earlier this year as pump prices increased again.
The new fuel tax reduction scheme in Germany provides a total relief of roughly €2.5 billion for consumers and companies. State governments will contribute €1.25 billion through a fixed portion of VAT revenue. The legislation still needs approval from the Bundestag and Bundesrat before it can become law. Officials have coordinated the plan with state authorities and coalition parliamentary groups. As of Sept. 22, the proposal had not yet received parliamentary approval, which is necessary for the scheduled October implementation.
Germany previously introduced a similar fuel-tax cut during May and June 2026. That measure lowered the energy tax on petrol and diesel by 14.04 cents per litre. The related VAT reduction brought total tax relief to around 17 cents per litre. The Federal Cartel Office and the Independent Monopolies Commission later confirmed that most retailers passed the reduction onto consumers. This rebate ended on June 30, returning to normal energy-tax rates before the latest plan was devised.
Tax cuts aimed at reducing petrol and diesel expenses
The new measure employs the same core tax mechanism to lower costs for petrol and diesel. The direct energy-tax reduction is 14 cents per litre. Because VAT decreases with the lower taxable retail amount, it also falls. This results in an overall tax reduction of about 17 cents per litre. Retail prices at different stations can still vary because wholesale costs, distribution, and individual pricing also influence the final price.
The federal government announced this package following a notable rise in fuel prices during September. World oil prices had increased by roughly 30% due to renewed Middle East conflict and disruptions through the Strait of Hormuz. These events coincided with higher petrol and diesel prices across Germany. The tax package benefits both private drivers and commercial buyers of road fuel. Its €2.5 billion value represents the estimated total relief during the three-month period ending in December.
The previous rebate offers a recent benchmark
The earlier rebate started on May 1 and lasted through June 30. It reduced energy-tax rates on petrol and diesel for two months. Including VAT, the reduction was about 17 cents per litre, matching the current proposal. That rebate caused an estimated €1.6 billion in revenue losses. The October plan extends the same relief in a three-month span, covering the last quarter of 2026.
The draft sets Oct. 1 as the start date and Dec. 31 as the end date. Final approval from parliament is required before it can be enacted. The Bundestag and Bundesrat are scheduled to review the measure after the cabinet’s approval. The approved plan offers a 14-cent reduction in energy tax and around 17 cents in total tax relief per litre. Germany’s states will contribute €1.25 billion toward the €2.5 billion overall cost of this temporary fuel-tax reduction.