Drivers in Iceland are preparing for a major change in how road use is taxed after Iceland’s parliament (Althing) approved a new kilometre-based charge this week.
The system, passed by the Althing under the government of Prime Minister Kristrún Frostadóttir, will come into force on 1 January 2026.
The tax will apply to all vehicles, regardless of whether they run on petrol, diesel or electricity. Charges are calculated according to weight, with cars and SUVs weighing up to 3.5 tons paying 6.95 ISK per kilometre.
Heavier vehicles, including buses, lorries and trailers, will pay progressively more under a 29-band scale.
Running Costs To Rise Next Year
As reported by Morgunblaðið, payments will be collected monthly through online banking, using estimated mileage based on previous records.
Car owners must submit odometer readings at least once a year, with larger vehicles required to report more frequently. Any difference between estimated and actual mileage will be settled at the next registration, either through a refund or an extra charge.
According to the Icelandic Transport Authority, most motorists are expected to see running costs rise by between 7% and 20%. Owners of large SUVs, however, could pay less overall, while drivers of smaller, fuel-efficient cars may face higher annual costs.
Failure to register mileage or pay on time could lead to fines, failed inspections and, in serious cases, the seizure of licence plates.
