Iceland’s New 2026 Road Charge: What Drivers and Tourists Need to Know

23-12-2025

Planning a new road trip in Iceland in 2026? Then know there have been several changes that you need to consider. Starting January 1, 2026, the Icelandic government is changing how road maintenance is funded, and therefore it affects every driver, and yes, including visitors. Please stay tuned; here's all you need to know about Iceland's new road tax.

What’s changing with Iceland’s road tax in 2026?

The country is currently rolling out a per-kilometer road charge to replace the old fuel duties that were paid directly at the pump. The good news is that this update is meant to be fairer across the board, especially as more electric vehicles enter the roads. The even better news is that Iceland Cars is handling it in a way that keeps your rental simple and predictable. Let's find out how!

What does this mean for my Iceland car rental?

Up to now, road taxes were baked into fuel prices. From 2026 onward, those fuel duties are being removed, which is why fuel prices are expected to drop (estimates suggest around 80 ISK per liter, or roughly USD 0.64 less per liter).

Instead of paying indirectly through fuel, the new model charges a small amount based on how far a vehicle travels. In other words, every vehicle pays per kilometer driven, whether it runs on gas, diesel, or electricity. It’s designed so everyone who uses Iceland’s roads contributes in a more consistent way.

If this sounds messy for you, we’ve made it seamless for our customers. Here's what to expect:

• Per-km charge: According to the law, road charges will start from 6.95 Icelandic krona per kilometer (around USD 0.05). Admin and transaction fees may apply. 
• A more consistent tax: Depending on the final government guidelines, which are still being discussed, the tax will be applied either before you travel or after you return. If you are charged in advance, we will finalize the exact amount when you bring the car back, ensuring you only pay for the distance you actually drove.
• One more perk: because the charge is no longer tied to fuel, your final road cost won’t depend on how efficient your car is or whether you chose an EV. It’s simply based on driving, which makes the system more consistent for travelers who are comparing vehicle types. 

FAQ About Iceland’s Mandatory Road Tax

Why is Iceland switching to a per-kilometer system?

Because fuel taxes don’t work as well when more vehicles use less fuel (or none at all). Charging per kilometer ties road funding to actual road use.

When does it start?

The system is scheduled to begin on January 1, 2026.

Where can I read the official details?

You can find more information on the Icelandic government site.

What is the national per-kilometer rate?

For standard passenger vehicles, the base rate starts from 6.95 ISK per kilometer (about USD 0.05 per km). 

Does it apply to tourists?

Yes. The charge applies to all vehicles using Iceland’s roads, regardless of the driver’s nationality or residency.

Does the vehicle category change the road tax fee?

This new Icelandic road charge is applied consistently across vehicle types, so whether you rent a compact for the city or a 4x4 for rougher routes, the road charge itself follows the same principle. What changes is your comfort and capability for different road conditions, not the tax structure.

Ready to lock in your 2026 trip? Book your Iceland rental car and enjoy transparent pricing from the start.