As of 1 January 2026, Iceland has introduced a nationwide, distance-based road usage fee. The former fuel tax has been abolished and replaced by a per-kilometre charge that applies to all vehicles, regardless of engine type.
For passenger cars up to 3.5 tonnes, the fee is set at 6.95 ISK per kilometre. International visitors typically pay a flat daily charge via rental car companies, currently around 1,550 ISK. Certain infrastructure projects, such as the Vaðlaheiðargöng tunnel, remain subject to additional tolls.
The change reflects a broader shift: mobility is increasingly priced based on use rather than fuel consumption. While fuel prices have decreased, the higher CO₂ tax largely offsets the savings. For tour operators and buyers, this means Iceland is not necessarily becoming cheaper, but costs are more visible and easier to calculate. Self-drive itineraries remain viable, yet pricing logic and sustainability messaging will require clearer explanation in sales and customer communication.
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