Volkswagen AG's settlement with nearly 500,000 US diesel owners and government regulators over polluting vehicles is valued at more than $US15 billion ($NZ20.9 billion) cash, a source briefed on the matter says.

The settlement, to be announced in Washington, includes $US10.03 billion to offer buybacks to owners of about 475,000 polluting vehicles and nearly $US5 billion in funds to offset excess diesel emissions and boost zero emission vehicles, the source said.

A separate settlement with nearly all US state attorneys-general over excess diesel emissions will be announced on Tuesday and is expected to be more than $US500 million and will push the total to over $US15 billion, a separate source briefed on the matter said.

Spokeswomen for US Environmental Protection Agency and Volkswagen declined to comment.

Speaking on condition of anonymity, due to court-imposed gag rules, the original source said that owners of 2.0 litre diesel VW 2009-2015 cars will receive an average of $US5,000 in compensation along with the estimated value of the vehicles as of September 2015, before the scandal erupted.

Prior owners will get half of current owners, while people who leased cars will also get compensation, said the original source.

Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming US regulators approve a fix at a later date.

The settlement, the largest ever automotive buyback offer in US history and most expensive auto industry scandal, stems from the German carmaker's admission in September 2015 that it intentionally misled regulators by installing secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution.