Image of a car rental, KIA Sorrento, driving in Iceland

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Iceland Road Tax 2026: What Blue Car Rental Customers Should Know

1 min read

Magnús Jóhann Björnsson
22 Dec. 2025

Blog / Practical info / Iceland Road Tax 2026: What Blue Car Rental Customers Should Know

Magnús Jóhann Björnsson
22 Dec. 2025

Blog / Practical info / Iceland Road Tax 2026: What Blue Car Rental Customers Should Know

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If you are planning to drive in Iceland from January 1, 2026, you should be aware of a new mandatory Road Tax, sometimes referred to as the kilometer tax. It applies to all vehicles driving on Icelandic roads, including rental cars.

What is the Iceland Road Tax?

The Road Tax is a government requirement introduced in 2026 as part of a national shift in how road maintenance and infrastructure are funded. Official information is published by Icelandic authorities at vegirokkarallra.is.

The "Silver Lining" for Drivers: The introduction of this tax coincides with a significant reduction in fuel taxes at the pump. This means that while you will see a separate Road Tax on your rental, you will benefit from lower petrol and diesel prices across Iceland compared to previous years. This system ensures that all road users—including those in electric vehicles—contribute fairly to the upkeep of the island's infrastructure.

Image that shows the drop of fuel prices for road tax in Iceland

How Blue Car Rental applies the Road Tax

At Blue Car Rental, the Road Tax is applied as a fixed daily rate.

While the government mandate is technically calculated per kilometer, we have simplified the process for our customers. By using a fixed daily rate based on your rental period, the total cost is known upfront at the time of booking. This allows you to enjoy unlimited mileage in Iceland without worrying about the math.

Image of a car rental 4x4 SUV in Iceland with beautiful landscape

What this means for your trip

No "Bill Shock": Unlike a per-kilometer charge where the final cost is a mystery until you return, our fixed rate is transparent and locked in from day one.
Unlimited kilometers: You can drive freely, whether you are following a Ring Road itinerary or exploring more remote regions, without "counting kilometers" to save on tax.
Simple return: The Road Tax is handled in advance, supporting a smooth pick-up and drop-off process. You won't need to wait for an odometer reading or extra billing at the end of your trip.

Planning longer drives in Iceland

Many visitors travel well beyond city areas and take scenic routes or regional road trips. Guides such as driving in the Westfjords show why predictable pricing matters. By choosing a fixed daily fee, we ensure that those exploring the furthest corners of Iceland aren’t penalized for their sense of adventure.

Image of information related to the km road tax in Iceland

Booking for 2026

If you are planning a self-drive trip in 2026, you can book with Blue Car Rental knowing the Road Tax is included as a fixed daily rate. No hidden fees, no complicated calculations—just the freedom of the Icelandic road.

FAQ

Is the Road Tax mandatory for all car types?

Yes. As of January 1, 2026, the Icelandic government requires a Road Tax for all vehicles, regardless of whether they run on petrol, diesel, or electricity. This ensures everyone contributes to the maintenance of the roads they travel on.

Why does Blue Car Rental charge a daily fee instead of per kilometer?

The government system is based on actual mileage, but we want our customers to have a stress-free experience. By using a fixed daily rate of 1,390 ISK, you know exactly what you’ll pay upfront. You won’t have to track your odometer or worry about a surprise bill if you decide to drive further than planned.

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Not necessarily! The new Road Tax replaces old taxes that were previously included in fuel prices. Because those taxes have been removed, you will find that petrol and diesel prices at the pump are significantly lower than in previous years, which helps balance out the daily fee.

Is this the same as a tunnel toll or parking fee?

No. The Road Tax is a general fee for using the national road system. Specific tolls (like the Vaðlaheiði Tunnel) and entrance fees for National Parks (like Þingvellir or Skaftafell) are separate and must be paid by the driver at the time of use.

What if I have "Unlimited Kilometers" on my rental?

You still do! Our fixed daily Road Tax is separate from your mileage allowance. You can still drive as much as you want across Iceland without any additional "per-kilometer" charges from us.

What happens if I extend or shorten my rental?

Since the tax is a daily fee, it is tied to your rental period. If you extend your trip, the tax will be added for the extra days. If you shorten your rental according to our terms, the tax will be adjusted to reflect only the days you actually have the vehicle.