BERLIN, GERMANY / RankWire.AI / – Germany’s federal and regional authorities have reached an agreement to decrease the energy tax on petrol and diesel by 14 cents per litre. When combined with a lower value-added tax, this measure is expected to cut the overall tax on fuel by roughly 17 cents per litre. The proposed relief is set to be in effect from Oct. 1 through Dec. 31, 2026. The cabinet has endorsed the draft legislation for parliamentary review, reviving a temporary fuel-tax rebate previously used earlier this year, as fuel prices surged again.
The new fuel tax reduction plan in Germany offers a total relief valued at approximately €2.5 billion for consumers and businesses. Federal states will contribute €1.25 billion via a fixed share of VAT revenue. The legislation now awaits approval from both the Bundestag and Bundesrat before it can be enacted. Authorities have coordinated the proposal with regional governments and coalition parliamentary groups. As of Sept. 22, the proposal had not yet completed the necessary parliamentary approval process to commence in October.
A similar reduction in fuel taxes was implemented in Germany during May and June 2026. That initiative lowered the energy tax on petrol and diesel by 14.04 cents per litre, with the VAT reduction bringing total tax relief to around 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later confirmed that retailers largely transferred the savings to consumers. The previous rebate ended on June 30, returning the energy-tax rates to their normal levels before the latest package was drafted.
Tax cut aims to lower petrol and diesel expenses
The new legislation employs the same fundamental tax mechanism to reduce costs for petrol and diesel. The direct energy-tax cut is set at 14 cents per litre. Since VAT also decreases due to the lower taxable retail amount, the total combined tax reduction reaches approximately 17 cents per litre. Despite this, retail prices at different filling stations may still vary, influenced by wholesale costs, distribution expenses, and station-specific pricing strategies.
The federal government announced the measure following a notable rise in fuel prices during September. It reported that global oil prices had increased by about 30% amid the renewed Middle East conflict and disruptions through the Strait of Hormuz. These developments coincided with higher petrol and diesel costs across Germany. The relief package benefits both private drivers and commercial entities that purchase fuel for road use. Its €2.5 billion value reflects the estimated total savings over the three months ending in December.
Previous rebate sets recent benchmark
The earlier rebate was introduced on May 1 and lasted until June 30, reducing energy-tax rates for petrol and diesel for two months. Including VAT, the total reduction was about 17 cents per litre, mirroring the scope of the current plan. That measure is estimated to have caused revenue losses of approximately €1.6 billion. The October relief plan extends the same basic form of tax reduction across three months, covering the final quarter of 2026.
The new draft sets Oct. 1 as the starting date and Dec. 31 as the end date. Final approval from parliament remains necessary before implementation. The Bundestag and Bundesrat are expected to review the legislation following the cabinet’s approval of the draft. The approved package maintains a 14-cent reduction in energy tax, resulting in about 17 cents per litre in total tax relief. Germany’s states will contribute €1.25 billion toward the overall €2.5 billion cost of this temporary fuel-tax reduction.