BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state governments have agreed to cut the energy tax on petrol and diesel by 14 cents per litre. Including lower value-added tax, the package would reduce the total tax burden on fuel by about 17 cents per litre. The relief is scheduled to run from Oct. 1 through Dec. 31, 2026. Germany’s cabinet has approved the draft measure for parliamentary consideration. The package revives a temporary fuel-tax rebate used earlier this year as pump prices rose again.
The new Germany fuel tax package carries total relief of around €2.5 billion for consumers and businesses. Federal states will contribute €1.25 billion through a fixed share of VAT revenue. The legislation still requires approval from the Bundestag and Bundesrat before it can take effect. Officials have coordinated the measure with state governments and coalition parliamentary groups. As of Sept. 22, the proposal had not completed the parliamentary approval process required for the scheduled October start.
Germany used a similar fuel-tax reduction during May and June 2026. That measure lowered the energy tax on petrol and diesel by 14.04 cents per litre. The related VAT reduction brought total tax relief to around 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later found that retailers largely passed the reduction to consumers. The earlier rebate ended on June 30, restoring the normal energy-tax rates before the latest package was prepared.
Tax reduction targets petrol and diesel costs
The new measure uses the same basic tax mechanism to reduce costs on petrol and diesel. The direct energy-tax reduction amounts to 14 cents for each litre. VAT also falls because the taxable retail amount becomes lower when the energy tax declines. That effect brings the combined tax reduction to approximately 17 cents per litre. Fuel prices can still differ among filling stations because retail prices also reflect wholesale costs, distribution expenses and individual station pricing.
The federal government announced the package after another sharp increase in fuel costs during September. It said world oil prices had risen by about 30% following the renewed Middle East conflict and disruption through the Strait of Hormuz. Those developments coincided with higher petrol and diesel prices across Germany. The tax package covers both private motorists and businesses that purchase road fuel. Its €2.5 billion value represents the estimated combined relief during the three-month period ending in December.
Previous rebate provides recent benchmark
The previous rebate took effect on May 1 and remained in force through June 30. It reduced energy-tax rates for both petrol and diesel for two months. Including VAT, the reduction amounted to around 17 cents per litre, matching the scale of the latest proposal. That earlier measure resulted in estimated tax revenue losses of about €1.6 billion. The October package extends the same general form of relief across three months, covering the final quarter of 2026.
The latest draft sets Oct. 1 as the planned start date and Dec. 31 as the expiry date. Parliamentary approval remains the final legislative step before implementation. The Bundestag and Bundesrat are due to consider the measure after the cabinet’s approval of the draft. The confirmed package provides a 14-cent energy-tax reduction and about 17 cents per litre in total tax relief. Germany’s states will provide €1.25 billion toward the overall €2.5 billion cost of the temporary fuel-tax measure.