German car tax (Kfz-Steuer) explained: engine size and CO2

What you are calculating

German car tax is a fixed cost block in any car budget – every year, regardless of how much you drive. If you buy or compare a car, you should know it. These calculators help:

The two building blocks

For cars first registered from July 2009, a two-part system applies:

• Engine size part – a fixed amount per 100 cc of displacement started.
• CO2 part – an amount per gram of CO2 per kilometer above a free allowance.

The annual tax is the sum of both parts. The binding amount is always the assessment notice from German customs (Inch), which administers car tax in Germany.

Engine size part

The engine-size part clearly differs by fuel type:

"Per 100 cc started" matters: an engine of 1,598 cc counts as 1,600 cc, i.e. 16 units. For petrol that is 16 × €2.00 = €32.00, for diesel 16 × €9.50 = €152.00. The higher diesel rate is the main reason diesels almost always cost more in tax.

CO2 part

Above the free allowance of 95 g/km, each additional gram of CO2 is taxed progressively: the higher the emissions, the more expensive the upper grams. For registrations from 2021 these tiers apply:

The first 95 g/km are always free. A car at exactly 95 g/km pays no CO2 part at all, only the engine-size part.

Worked example: petrol

A compact petrol car with 1,598 cc and 132 g/km CO2:

• Engine size: 16 × €2.00 = €32.00
• CO2 above 95 g/km: 132 − 95 = 37 g/km
  • 96 to 115 (20g) × €2.00 = €40.00
  • 116 to 132 (17g) × €2.20 = €37.40
  • CO2 part = €77.40
• Annual tax ≈ €109

Worked example: diesel

A diesel with 1,968 cc and 148 g/km CO2:

• Engine size: 20 × €9.50 = €190.00
• CO2 above 95 g/km: 148 − 95 = 53 g/km
  • 96 to 115 (20g) × €2.00 = €40.00
  • 116 to 135 (20g) × €2.20 = €44.00
  • 136 to 148 (13g) × €2.50 = €32.50
  • CO2 part = €116.50
• Annual tax ≈ €306

Similar engine range, similar CO2 value – and yet the diesel pays almost three times as much. Weigh exactly this difference against cheaper diesel fuel. The car tax calculator does the full comparison in seconds.

Electric cars and hybrids

Pure electric cars are exempt from car tax until a legally fixed deadline. That is a noticeable cost advantage that belongs in any total comparison – together with electricity instead of fuel costs and the purchase price. The EV vs combustion calculator puts these items side by side.

Plug-in and mild hybrids count as combustion cars for tax: they pay the normal engine-size and CO2 part based on their registered combustion engine.

What affects the tax – and what does not

• Engine size and CO2 are the only two levers for standard cars. A smaller engine with low CO2 reduces both parts.
• Mileage doesn't matter. Car tax is fixed – low-mileage drivers pay the same amount.
• Special cases like classic cars or motorhomes follow their own rules and are not covered here.

Common misconceptions

• "Diesel is always more expensive." In tax yes, in the total picture not necessarily – high-mileage drivers often benefit from cheaper fuel.
• "CO2 only matters at very high emissions." Every gram counts from 96 g/km, and the upper tiers are clearly more expensive.
• "Electric cars never pay car tax." The exemption is time-limited; after the deadline a reduced tax applies.

Conclusion

German car tax is predictable: engine-size part plus CO2 part, both based on clear rates. When comparing a car, look at the tax together with fuel costs, insurance and purchase price – only then is the picture complete. For a quick, transparent figure, use the car tax calculator.

Sources

• Motor Vehicle Tax Act (KraftStG) – gesetze-im-internet.de/kraftstg
• German Customs – motor vehicle tax – Zoll.de
• Federal Ministry of Finance – car tax and CO2 component – bundesfinanzministerium.de