Planning a road trip in Iceland is an adventure of a lifetime, and we're well aware that preparedness is essential. That’s why we inform you that, starting this 1st of January 2026, how drivers contribute to maintaining the country's stunning road network is changing.
The government of Iceland is introducing a new per-kilometer charge system, replacing the old fuel taxes. But fear not! For you as a rental customer of Cars Iceland, the key takeaway is simplicity: this new charge will be included as a convenient, transparent flat daily rate in your rental price, with no hidden fees or complex calculations. Do you want to know more? Keep on reading!
The change in Iceland's road charge
Until now, road taxes were collected at the pump through fuel duties, but this will no longer be so. This implies fuel prices will drop because the old fuel taxes are being removed, so it is estimated that the new price per liter will be cheaper, around 80 ISK (USD 0.64) per liter.
The new system for road tax is different: every vehicle pays a small fee for each kilometer driven on Icelandic roads, regardless of whether it's electric, diesel, or petrol. This ensures everyone who uses the roads helps maintain them fairly. If you would like to learn more about this new tax, please visit the official site here.
But at Cars Iceland, we wanted to make things much simpler for you with a flat daily rate.
How Cars Iceland applies this road tax
For Cars Iceland customers, this change is designed to be seamless. We will handle the new charge for you so you don’t have to worry about a thing.
- Flat daily rate: Instead of tracking kilometers or paying separate fees, the per-kilometer charge will be calculated into a flat daily fee of 1550 ISK (approx. USD 12) included in your quoted rental price. You see the total cost upfront.
- No surprises at return: There will be no need for complex mileage calculations or additional payments when you return the vehicle. The road usage cost is already covered.
- Focus on the adventure: This allows you to budget accurately and focus entirely on exploring Iceland's incredible landscapes, from the Ring Road to the highland trails, without administrative hassles.
In short, Iceland's new per-kilometer charge is a forward-thinking update to national infrastructure funding. For you, the renter, it translates to a simpler, more predictable rental experience. By choosing Cars Iceland, you’ll get this charge as a clear daily rate, and so you can enjoy the freedom of the open road with complete peace of mind. Easy peasy!
Ready to explore Iceland with simplicity and confidence? Book your 2026 car rental in Iceland with us today and secure your vehicle with our transparent pricing model.
Mandatory Road Tax in Iceland FAQ
Why is Iceland making this change?
It's a shift to a more modern and fairer system. Iceland is transitioning from a traditional fuel tax to a per-kilometer road usage charge. This means the fee for using and maintaining the roads will be based on the distance you drive, not the amount of fuel you purchase.
When does the new system start?
The per-kilometer charge is scheduled to be fully implemented starting the 1st of January 2026.
How much is the per-kilometer tax charge?
For standard passenger vehicles, the national base rate is 6.95 ISK (0.05 USD) per kilometer driven. Now, checking the total km driven, the vehicle’s odometer reading can be complicated and time-consuming. That’s why we at Cars Iceland will simply include it in our rentals as a flat daily rate of 1550 ISK, approximately USD 11 or EUR 10.
Will this road tax apply to tourists and visitors?
Yes, as this tax applies to all vehicles using the Icelandic road system regardless of the nationality of the driver or their residence.
Does the type of vehicle I rent affect the charge?
This new charge is the same for all vehicles in any category, making it equitable whether you choose a small city car or a larger 4x4 for the highlands.
What do I need to do differently when renting a car from 2026?
With Cars Iceland, absolutely nothing extra is required from you. The entire process remains the same: you book your vehicle, collect it, and enjoy your trip. The only difference is the peace of mind that the road tax is already taken care of in your rate.
Does this affect the pick-up or drop-off process?
No, it does not. You will not face any extra steps, calculations, or surprise fees when returning your vehicle. Our goal is to make the process completely seamless for you; that’s why we take care of the administrative reporting. You, as our customer, have no additional paperwork or tracking obligations.
Where can I find official information about this charge?
You can read more on the official Icelandic government taxes website for “Roads to the Future.”
