President Mahmoud Ahmadinejad made the announcement on his Web site and said a further 15 percent subsidy to those with private cars would also take effect sometime after Wednesday, The Wall Street Journal reported.
Sunday's new rates mean Iranians will now pay slightly more than $1 for a gallon of gas.
In 2007, to make up for the economic impact caused by U.N. sanctions because of its nuclear program, the government began rationing gasoline and citizens began torching gas stations, the report said.
Extra police were seen on the streets of Tehran Sunday, the Journal said.
An International Monetary Fund noted the average annual income in Iran is $3,600, although "a household of four in Iran gets on average about $4,000 a year in various subsidies on oil and natural gas alone."