BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have reached an agreement to lower the energy tax on petrol and diesel by 14 cents per litre. When including reduced value-added tax, the overall tax reduction will be approximately 17 cents per litre. The temporary relief is set to be in effect from Oct. 1 through Dec. 31, 2026. The draft legislation has received approval from Germany’s cabinet to move forward to parliamentary review. This initiative revives a temporary fuel-tax rebate previously used earlier this year as fuel prices increased again.
The new fuel tax relief package in Germany aims to provide approximately €2.5 billion in savings for consumers and businesses. The federal states will contribute €1.25 billion through a designated share of VAT revenue. The legislation still needs to be approved by both the Bundestag and Bundesrat before it can be enacted. Officials have coordinated this measure with state governments and coalition parliamentary groups. As of Sept. 22, the proposal had not yet completed the required parliamentary approval process for its scheduled October implementation.
Earlier this year, Germany implemented a similar reduction in fuel taxes during May and June 2026. That measure decreased the energy tax on petrol and diesel by 14.04 cents per litre. The reduction in VAT brought the total tax relief to roughly 17 cents per litre. Subsequently, the Federal Cartel Office and Independent Monopolies Commission determined that most retailers passed the tax reduction directly to consumers. This rebate ended on June 30, returning to the usual energy-tax rates prior to the development of the latest package.
Tax cut aims to lower petrol and diesel expenses
The current measure employs the same core mechanism for reducing costs on petrol and diesel. The direct energy-tax cut is set at 14 cents per litre, and because the taxable retail amount decreases with the tax reduction, VAT is also reduced. This combined effect results in an approximate total tax relief of 17 cents per litre. Retail fuel prices may still differ among stations due to wholesale costs, distribution fees, and individual station pricing strategies.
The federal government announced this package following a significant surge in fuel prices during September. They indicated that global oil prices rose by about 30% amid renewed conflicts in the Middle East and disruptions through the Strait of Hormuz. These developments coincided with higher petrol and diesel prices across Germany. The tax relief covers both private drivers and commercial entities purchasing road fuel. The €2.5 billion total reflects an estimated relief for this three-month period ending in December.
The previous rebate sets a recent reference point
The earlier rebate was introduced on May 1 and lasted until June 30. During this period, energy-tax rates for petrol and diesel were reduced for two months. When including VAT, the total reduction equaled around 17 cents per litre, similar in scope to the current proposal. The earlier initiative resulted in estimated revenue losses of about €1.6 billion. The new October package maintains a similar form of relief, spanning three months and covering the last quarter of 2026.
The proposed legislation sets October 1 as the starting date and December 31 as the end date. Parliamentary approval remains the final legislative step before implementation. Following the cabinet’s approval of the draft, the Bundestag and Bundesrat will review and decide on the measure. The approved plan maintains a 14-cent energy-tax reduction and approximately 17 cents per litre in total tax relief. The German states will contribute €1.25 billion toward the overall €2.5 billion cost of this temporary fuel-tax relief.