Temporary Fuel Tax Reductions (Cycle of Extensions)

Originally implemented in 2021 to mitigate high global energy prices, this policy provides temporary reductions in fuel taxes under the Transportation, Energy and Environment Tax. The reductions are adjusted and extended through Presidential Decrees.In October 2025, the government extended the fuel tax cuts to 31 December 2025, maintaining reduced rates of approximately 423 won/ℓ for gasoline and 263 won/ℓ for diesel, with a 7% reduction for gasoline and 10% for diesel and LPG.On 12 February 2026, the government further extended the fuel tax reductions to 30 April 2026 in response to continued global price volatility and supply risks linked to the Strait of Hormuz crisis.In parallel, the policy includes temporary tax reductions on fuels used in power generation, such as a 15% cut in taxes on natural gas and bituminous coal, aimed at stabilising electricity prices.

In April 2026, the government also expanded the LPG butane reduction rate from 10% to 25%, with an additional reduction effect of about KRW 31/ℓ, and applied the expanded LPG butane reduction through 30 June 2026. 

The framework allows for repeated extensions and rate adjustments depending on international energy market conditions

Want to know more about this policy ? Learn more