German government U-turns on electricity tax cuts for households

The CDU-led German government will scrap plans to reduce electricity taxes for households and small businesses. The decision is a U-turn on one of its central election campaign promises.

German government scraps electricity tax cut plan

Germany’s CDU/SPD coalition government has announced that it will scrap plans to financially relieve households and small businesses by introducing an electricity tax cut. The tax cut was a central policy that the CDU used to attract voters in the lead-up to the February 2025 federal election.

The coalition cited budget constraints as the motivation for the U-turn. The policy was expected to cost a total of 5,4 billion euros in 2025, but now only larger businesses will benefit from an electricity tax cut.

Following the initial announcement of the U-turn in late June, public outcry prompted the coalition to reconsider its position. Following what is widely regarded as the first major public setback for the new CDU-led government, the party is sticking to its guns.

According to March 2025 figures from Statista, German households pay an average of 0,34 cents per kilowatt-hour for electricity. In 2025, the average monthly electricity bill for a three-person household in Germany amounts to around 116,08 euros.

This makes Germany the third-most expensive country in the world for household electricity costs; however, the average is the same as in the United Kingdom or Belgium. Prices in neighbouring Denmark, the Netherlands and France are only slightly cheaper.

CDU members defend and criticise electricity tax U-turn

Politicians are divided on the decision. Speaking to ARD, CDU parliamentary group leader Jens Spahn said while the long-term goal remains to reduce electricity prices for everyone, “we also want sound finances”. “After three years of recession, this can only be done gradually,” Spahn said, explaining that households would see relief by 2026.

But criticism has also come from within the CDU. Speaking to tabloid newspaper Bild, state leader for North Rhine-Westphalia Hendrik Wüst said, "All options should be re-examined as to how an electricity tax reduction for everyone can be realised in a timely manner. This project must not simply be put on the back burner."

Head of the German Association of Skilled Crafts and Trades (ZDH) Jörd Dittirch has also criticised the decision. “Reducing electricity tax for all companies has not just been announced somewhere, it was repeatedly and bindingly written down – in the coalition treaty, in agreements of the coalition committee, and in the so-called relief package of the government,” Dittrich told SWR.