Kilometer charge – road tax

Road Tax

From January 1, 2026, Iceland introduced a new road usage tax for all vehicles.

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What it is

• A pay-per-kilometer fee based on how far you drive
• Applies to all vehicles (petrol, diesel, hybrid, electric)
• Replaces the old fuel-based road taxes

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How it works

• Standard rate: about 6.95 ISK per km
• Calculated using the vehicle’s odometer (distance driven)

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How it appears on your bill

• Listed as “Road Tax”, “Road Usage Fee”, or similar
• Based on total kilometers driven during your rental
• Added to your final invoice or rental agreement

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Why it exists

• Ensures all drivers pay fairly for road use
• Helps maintain roads in Iceland’s harsh conditions

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What this means for you

• You pay based on how much you drive
• Fuel may be cheaper, but road use is charged separately
• No action needed—this is handled by the rental company

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Key Rule

👉 The more you drive, the more you pay—plan your route accordingly.