BERLIN, GERMANY / RankWire.AI / – Germany’s federal and state authorities have agreed to implement a 14-cent per litre cut in the energy tax applied to petrol and diesel. When accounting for the reduced value-added tax, the overall tax burden on fuel would decrease by approximately 17 cents per litre. This relief is set to be in effect from October 1 until December 31, 2026. The German cabinet has approved the draft legislation for parliamentary review. This package reintroduces a temporary fuel-tax rebate that was used earlier this year as pump prices increased again.
The new fuel tax relief package in Germany will provide approximately €2.5 billion in savings for consumers and businesses. Federal states will contribute €1.25 billion through a fixed portion of VAT revenue. The legislation still needs approval from both the Bundestag and Bundesrat before it can be enacted. Officials have coordinated the measure with state governments and coalition parliamentary groups. As of September 22, the proposal had not yet completed the parliamentary approval process necessary for the scheduled October start date.
A similar fuel-tax reduction was applied in Germany during May and June 2026. That measure decreased the energy tax on petrol and diesel by 14.04 cents per litre. The corresponding VAT reduction resulted in a total tax relief of around 17 cents per litre. The Federal Cartel Office and Independent Monopolies Commission later confirmed that retailers largely passed this reduction on to consumers. The earlier rebate concluded on June 30, returning energy-tax rates to their normal levels before the latest package was prepared.
Tax cut aims to reduce petrol and diesel expenses
The new policy employs the same basic tax mechanism to lower costs for petrol and diesel. The direct energy-tax reduction is set at 14 cents per litre. Additionally, VAT decreases because the taxable retail amount is lower when the energy tax drops. This combined effect results in an overall tax reduction of about 17 cents per litre. Despite this, fuel prices at different stations can still vary due to wholesale costs, distribution expenses, and individual station pricing strategies.
The federal government announced the relief package after fuel prices surged again in September. It noted that global oil prices had increased by roughly 30% following renewed Middle East conflict and disruptions through the Strait of Hormuz. These developments coincided with rising petrol and diesel prices across Germany. The tax relief benefits both private drivers and businesses that purchase road fuel. The €2.5 billion figure reflects the estimated total savings during the three months ending in December.
Recent rebate sets a reference point for current relief
The previous rebate started on May 1 and lasted until June 30. It reduced the energy-tax rates for petrol and diesel for that two-month period. Including VAT, the total reduction was around 17 cents per litre, similar to the latest proposal. That rebate led to estimated revenue losses of approximately €1.6 billion. The October package extends the same general form of relief over a three-month period, covering the final quarter of 2026.
The current draft sets October 1 as the starting date and December 31 as the end date. Final legislative approval from Parliament is required before implementation. The Bundesrat and Bundestag are scheduled to review the measure following the cabinet’s approval of the draft. The confirmed package includes a 14-cent energy-tax reduction and about 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 measure.