BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have agreed to reduce the energy tax on petrol and diesel by 14 cents per litre. The overall tax decrease, which includes a cut in value-added tax, will total approximately 17 cents per litre. This relief is planned to be in effect from Oct. 1 through Dec. 31, 2026. The cabinet has already approved the draft legislation for parliamentary review. The measure revives a temporary fuel-tax rebate used earlier this year as pump prices increased once again.
The new fuel tax relief package in Germany will amount to roughly €2.5 billion in benefits for both consumers and businesses. The federal states will contribute €1.25 billion by allocating a fixed portion of VAT revenue. The legislation now awaits approval from both the Bundestag and Bundesrat before it can become law. Officials have coordinated the proposal with state governments and coalition parliamentary groups. As of Sept. 22, the proposal had not yet cleared the parliamentary approval process needed for the scheduled October implementation.
Germany previously implemented a similar reduction in fuel taxes during May and June 2026. That measure lowered the energy tax on petrol and diesel by 14.04 cents per litre, with the VAT reduction bringing total relief to around 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later confirmed that retailers largely passed this reduction onto consumers. The earlier rebate ended on June 30, returning the energy-tax rates to normal before the latest package was developed.
Tax cut aims to reduce petrol and diesel expenses
The new initiative employs the same fundamental tax mechanism to lower costs on petrol and diesel. The direct energy-tax cut is set at 14 cents per litre, with VAT also decreasing because the taxable retail amount becomes lower as a result of the reduced energy tax. This combined effect results in an approximate total tax relief of 17 cents per litre. Nevertheless, fuel prices at different stations can vary due to wholesale costs, distribution expenses, and individual station pricing strategies.
The federal government announced the measure following another sharp increase in fuel prices during September. They indicated that global oil prices surged by about 30% amid renewed Middle East conflicts and disruptions through the Strait of Hormuz. These developments coincided with rising petrol and diesel costs across Germany. The package is designed to benefit both private motorists and commercial buyers of road fuel. Its €2.5 billion estimated value reflects the total relief projected for the three-month period ending in December.
Recent rebate serves as a recent reference point
The previous rebate was introduced on May 1 and lasted until June 30. It decreased the energy-tax rates for petrol and diesel during this two-month span. Including VAT, the reduction equaled around 17 cents per litre, aligning with the scope of the current proposal. That earlier rebate resulted in estimated tax revenue losses of about €1.6 billion. The October package extends the same basic form of relief over three months, covering the last quarter of 2026.
The draft legislation sets Oct. 1 as the intended start date and Dec. 31 as the end date. Parliamentary approval remains the final step before implementation. After the cabinet’s approval of the draft, the Bundesrat and Bundestag will review the measure. The confirmed package maintains a 14-cent energy-tax reduction and approximately 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.