BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have reached an agreement to reduce the energy tax on petrol and diesel by 14 cents per litre. When including the lower value-added tax, this measure will decrease the overall tax burden on fuel by approximately 17 cents per litre. The relief is scheduled to be in effect from Oct. 1 through Dec. 31, 2026. The cabinet has approved the draft legislation for parliamentary review, revitalizing a temporary fuel-tax rebate that was used earlier this year as pump prices increased once again.
The new fuel tax relief package in Germany provides a total benefit of around €2.5 billion for consumers and businesses. The federal states will contribute €1.25 billion via a fixed share of VAT revenue. Approval from both the Bundestag and Bundesrat is still needed before the measure can be implemented. The government officials have coordinated efforts with state administrations and coalition parliamentary groups. As of Sept. 22, the proposal had yet to complete the necessary parliamentary approval process for the planned October start date.
A similar reduction in fuel taxes was implemented in Germany during May and June 2026. During that period, the energy tax on petrol and diesel was lowered by 14.04 cents per litre. The VAT reduction associated with this measure brought total tax relief to around 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later confirmed that retailers largely passed the reduction onto consumers. That rebate concluded on June 30, returning the energy-tax rates to their standard levels before the new package was drafted.
Tax relief targets petrol and diesel expenses
The latest measure 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, and the VAT decreases as the taxable retail amount drops due to the lower energy tax. This combined effect results in an overall tax reduction of roughly 17 cents per litre. Despite the cut, fuel prices at different filling stations may still vary, influenced by wholesale costs, distribution expenses, and individual station pricing strategies.
Following another sharp rise in fuel prices during September, the federal government announced this package, citing a roughly 30% increase in world oil prices due to renewed Middle East conflicts and disruptions through the Strait of Hormuz. These geopolitical events led to higher petrol and diesel prices across Germany. The €2.5 billion tax relief is intended to benefit both private motorists and commercial buyers of road fuel, covering an estimated total relief over the three months ending in December.
Recent rebate as a benchmark for ongoing relief
The previous rebate was introduced on May 1 and remained in effect until June 30, reducing energy-tax rates for petrol and diesel for two months. Including VAT, the reduction was approximately 17 cents per litre, matching the scale of the current proposal. That earlier initiative led to an estimated €1.6 billion in tax revenue losses. The October package builds on that previous relief, extending the same basic approach over three months, covering the last quarter of 2026.
The planned start date for this latest draft is October 1, with an expiration on December 31. Final legislative approval is pending, requiring the Bundestag and Bundesrat to review and approve the measure after the cabinet’s endorsement. The approved package maintains a 14-cent energy-tax reduction, resulting in about 17 cents per litre in total tax relief. The states of Germany will contribute €1.25 billion toward the overall €2.5 billion cost of this temporary fuel-tax reduction.