The federal government and various states have agreed to reduce the energy tax on gasoline and diesel by 14 cents per liter, a measure that will take effect until the end of 2026. The federal government confirmed this decision on Friday evening. Including value-added tax, the overall relief for fuel costs will sum up to 17 cents per liter.
The total cost of this initiative is estimated at around 2.5 billion euros. The individual states will contribute 1.25 billion euros toward this effort through a fixed value-added tax levy. The reduction is set to be implemented by October 1st.
Looking ahead, the federal government plans to engage in discussions with the oil and gas industry. The goal is to introduce a fuel price cap, modeled after systems used in Luxembourg or Belgium, no later than January 1, 2027, while ensuring supply security is not compromised. Furthermore, steps will be taken to establish the criteria for a needs-based direct payment mechanism, which would allow for targeted relief for particularly affected residents and businesses, should the need arise.
The federal government also stated that it welcomes discussions within the European Union regarding the potential examination of similar measures against the oil and gas sector, drawing parallels to the EU’s 2022 energy crisis contribution. This followed a previous statement by EU Economic Commissioner Valdis Dombrovskis, who indicated that a proposal for such a “windfall tax” would not be put forward.
Political leaders weighed in on the decision. Federal Chancellor Friedrich Merz (CDU) remarked that the 2.5 billion euro relief is a significant achievement during a period of strained budgets, calling the agreement a strong signal for the country. Minister of Finance Lars Klingbeil (SPD) emphasized that the move helps lower fuel prices, relieves pressure on citizens, and stops exploitative pricing at pumps, adding that the fuel price cap will help limit costs and allow them to return crisis profits to the public.
The Minister-President of Lower Saxony, Olaf Lies (SPD), commented that fuel prices are currently spiraling out of control, and this consensus represents a decisive action. Gordon Schneider (CDU), the Minister-President of Rhineland-Palatinate, noted that the tax cut benefits not only individuals but also small and medium-sized enterprises, asserting that during difficult times, people need to rely on politics being capable of finding solutions.
Thorsten Frei (CDU), Chair of the CDU/CSU parliamentary group, said that the agreement sends a critical message of unity and that the public should not have to bear the burden alone. Matthias Miersch, Chair of the SPD parliamentary group, called the consideration of a “fuel price cap” a central move for stabilizing the situation amid a volatile foreign policy environment. He added that preparing the groundwork in 2027 would allow for socially graded relief for households disproportionately affected by the crisis, if necessary in the future.
