EU and SPD delay decision on additional tax reductions for electricity
Amidst ongoing debates, the German government is grappling with the implementation of key economic measures outlined in the April 2025 coalition agreement. As of early July 2025, the full electricity tax reduction for consumers and businesses, as promised, has yet to be initiated.
The initial government budget draft for 2025/26, prepared by SPD Finance Minister Lars Klingbeil, did not include a reduction in electricity tax for private households or small businesses, breaking a central election promise in the coalition agreement. The draft only covers relief for industries and agriculture, leaving households and minor firms excluded for now.
The coalition committee is currently discussing expanding electricity tax reductions to private households and all businesses, not just energy-intensive companies as planned originally. However, extending relief to everyone would cost around EUR 5.4 billion in 2026, requiring budgetary trade-offs elsewhere.
CDU/CSU leaders are pushing for quick implementation of broader electricity tax cuts to benefit everyone, emphasizing ongoing internal coalition negotiations to finalize exact measures and timing. Criticism from industry groups and business associations points to the limited scope of the current tax relief plans, which are seen as insufficient and unfairly favoring large companies over small/medium enterprises and households.
In a positive development, reliefs for net fees and the abolition of the gas storage surcharge for gas customers have already been initiated as of January 1, but not for all businesses and private households. The reduction in the energy tax for industry, agriculture, and forestry is to be "secured," but its implementation remains ongoing.
Meanwhile, the expansion of the mother's pension is set to be implemented as of January 1, 2027, and will be paid retroactively if a technical implementation is only possible at a later date. The leaders of Union and SPD have postponed a decision on a further reduction in the energy tax, citing budget constraints.
Further relief steps for consumers and the economy will be taken once "financial scope is available." The exact date and extent of these measures are still under discussion, with the government aiming to finalize and announce concrete steps soon after July 2025.
In conclusion, while some economic measures have been initiated, the full electricity tax reduction for all consumers and businesses, as promised in the coalition agreement, remains uncertain as of mid-2025 due to ongoing coalition negotiations and budget considerations. The expansion of the mother's pension, however, is set to be implemented in 2027, with provisions for retroactive payment if necessary.
Community policy discussions are emphasizing the need for an expansion of electricity tax reductions to private households and all businesses, given the ongoing internal coalition negotiations, particularly in the context of the finance industry. The full implementation of the employment policy, which includes broad electricity tax cuts for everyone, would require budgetary adjustments totaling EUR 5.4 billion in 2026, affecting other sectors and making it a significant matter of energy policy consideration.
