Fuel tax cut extended to February

Dec 24, 2025, 09:03 am

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A gas station in downtown Seoul. / Yonhap News

The government has decided to extend fuel tax cuts through February next year and prolong temporary tax relief on automobile purchases for an additional six months, aiming to stabilize prices and support household spending.

According to the Ministry of Economy and Finance, the government announced its plan for flexible tax rate operations for the first half of 2026 on Dec. 24.

The temporary fuel tax reduction on transportation fuels—initially set to expire at the end of this year—will be extended by two months until Feb. 28, 2026, in light of volatile global oil prices and continued pressure on household fuel costs. The current cuts stand at 7% for gasoline and 10% for diesel and liquefied petroleum gas (LPG) butane.

As a result, fuel prices will remain lower by about 57 won per liter for gasoline, 58 won for diesel, and 20 won for LPG butane over the next two months compared with pre-cut tax rates, the ministry said.

The government also decided to extend the temporary reduction in the individual consumption tax on automobiles by six months. The measure, designed to support a recovery in domestic consumption, will be terminated after the extension period, reflecting recent signs of improvement in the local economy.

Meanwhile, authorities will allow the temporary tax cuts on power generation fuels—such as liquefied natural gas (LNG) for electricity generation and bituminous coal—to expire at the end of this month, citing stable prices for power generation inputs and easing cost burdens for state-run energy companies.

Officials said the combined measures are intended to balance inflation control with a gradual normalization of tax policy as economic conditions stabilize.

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