BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state authorities have agreed to reduce the energy tax on petrol and diesel by 14 cents per litre. When combined with lower value-added tax, this package is expected to decrease the overall fuel tax burden by approximately 17 cents per litre. The measure is set to be in effect from Oct. 1 until Dec. 31, 2026, and has been approved by Germany’s cabinet for parliamentary review. This initiative reinstates a temporary fuel-tax rebate used earlier this year, which was introduced as pump prices surged again.
The new fuel tax relief plan in Germany will provide roughly €2.5 billion in benefits to consumers and businesses, with federal states contributing €1.25 billion through a fixed portion of VAT revenue. The legislation still awaits approval from the Bundestag and Bundesrat before becoming law. Authorities have coordinated this measure with state governments and coalition parliamentary groups, but as of Sept. 22, the proposal had not yet completed the required parliamentary approval process for the scheduled October start.
A similar fuel-tax reduction was implemented in Germany during May and June 2026, decreasing the energy tax on petrol and diesel by 14.04 cents per litre. The associated VAT reduction resulted in total tax relief of around 17 cents per litre. Later assessments by the Federal Cartel Office and Independent Monopolies Commission confirmed that most retailers passed the reduction on to consumers. That rebate concluded on June 30, restoring normal energy-tax rates before the current package was drafted.
Tax cuts aimed at petrol and diesel costs
The latest measure employs the same basic tax structure to lower expenses for petrol and diesel, with a direct energy-tax reduction of 14 cents per litre. Because the taxable retail amount decreases as the energy tax drops, VAT also declines, leading to an overall tax relief of about 17 cents per litre. Despite this, fuel prices can still vary among stations since retail prices also include wholesale costs, distribution, and individual station pricing.
The federal government announced the package following another sharp rise in fuel prices during September, citing a roughly 30% increase in global oil prices due to renewed Middle East tensions and disruptions through the Strait of Hormuz. These developments coincided with higher petrol and diesel costs across Germany. The €2.5 billion relief will benefit both private drivers and commercial entities purchasing road fuel, representing an estimated total benefit during the final three months of 2026.
Earlier rebate as recent reference point
The previous rebate, effective from May 1 through June 30, reduced energy-tax rates on petrol and diesel for two months. When including VAT, the total reduction was around 17 cents per litre, matching the scope of the current proposal. That earlier initiative resulted in estimated revenue losses of about €1.6 billion. The upcoming package extends the same relief over three months, covering the last quarter of 2026.
The draft plan designates Oct. 1 as the start date and Dec. 31 as the end date. Parliamentary approval remains the final step before implementation, with the Bundestag and Bundesrat set to review the measure after cabinet approval. The confirmed plan includes a 14-cent reduction in energy tax and an overall tax relief of approximately 17 cents per litre, with €1.25 billion from Germany’s states contributing toward the total €2.5 billion cost of this temporary fuel-tax measure.