Kílómetragjald · Live since 1 January 2026
Iceland's road tax, company by company.
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The rules
The state sets two rates, not one
Nearly every guide to this tax quotes only the per-kilometre figure. There is a second official rate, and it explains almost everything about how rental pricing looks.
Kilometre fee
6.95 ISK / km
The headline rate. Vehicles and SUVs up to 3,500 kg. Charged on actual distance driven.
Daily fee (daggjald)
1,390 ISK / day
An optional flat rate rental companies may register vehicles on instead. Priced on an assumed 200 km per day — 1,390 ÷ 6.95 = 200 exactly.
Government break-even
200 km / day
Drive less than this and the kilometre fee is cheaper for you. Drive more and the daily fee is.
Why it matters
Your rental company chooses the scheme, and then separately chooses whether to pass it through at cost or add margin.
Those are two different decisions and they deserve to be judged separately.
If you are charged 1,390 ISK for a day on which you drove 40 km, that is Icelandic tax policy, not the rental
company overcharging you. If you are charged 1,550 for that same day, 160 of it is the company's.
The daily fee is only available to licensed rental companies, for vehicles of 3,500 kg or less, on contracts of no more than 30 consecutive days. Once a vehicle is registered on it, that is the final assessment — actual mileage is never used. Companies must notify the Director of Internal Revenue seven working days ahead, keep a vehicle on the daily fee for at least fifteen days, and file monthly reports of rental days.
ISK
What your rental will cost
Pick your company, or enter a rate yourself. The calculator separates what the state receives from what the company adds, and tells you the cheapest option available for your mileage.
Road tax on this rental
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Cheapest—
16 companies
Who charges what
Compiled from each company's own published guidance. The margin column is the difference between what the company charges and what the government actually collects — 1,390 ISK/day or 6.95 ISK/km. The government fee carries no VAT when passed on as its own line; a company's own fee carries 24% VAT, and the margins shown include it.
Gaps
Three of these sixteen publish their model but not their rate, and dozens of smaller Icelandic firms are not
here at all. We would rather show the gaps than pad the table. If your company is missing, ask them directly:
"Is the vehicle registered on the daily fee or the kilometre fee, and what exactly do you charge me?"
They are required to know the answer.
What the table shows
Four things worth knowing
1. 1,550 ISK/day is the market-standard flat rate, and it is 1,390 plus 160 of company fee (about 129 before VAT). Blue Car Rental, Cars Iceland, Lotus and RV Iceland all land on it. Only Lotus itemises the split, showing 1,390 road tax and 160 administration as separate lines. The others present 1,550 as though it were the tax itself.
2. Zero-margin options exist in both schemes. Lava Car Rental and MyCar charge the government daily rate of 1,390 with nothing added. Black Sheep Campers charges 6.95 per kilometre with nothing added. Budget Iceland publishes both government rates and adds no fee. If you are comparing two otherwise-equal quotes, this is a real and checkable difference.
3. Hertz and Thrifty Iceland publish an identical 1.40-plus-VAT service fee — 8.69 ISK per kilometre all in — which strongly suggests shared operation. Höldur's 8.81 implies a 1.50 fee plus VAT. The per-kilometre companies cluster just as tightly as the flat-rate ones.
4. Two campervan firms quote the fee in euro. Happy Campers and KuKu Campers both charge €11 per day, which is about 1,529 ISK today — but that figure, and the margin inside it, moves with the exchange rate rather than with Icelandic tax law.
Fairness
None of this is a scandal, and we are not going to pretend otherwise. Companies carry genuine reporting
obligations under the new system — seven days' notice to the Revenue Directorate, minimum registration
periods, monthly filings — and 160 ISK a day is not an outrageous price for absorbing that.
The point is simply that it is a company charge, not a tax, and you should be able to see which is which
before you book.
Mechanics
Questions people actually ask
What is the kilometre fee?
A per-kilometre road charge introduced on 1 January 2026, replacing the fuel duty that previously funded road maintenance. It applies to every vehicle regardless of energy source — petrol, diesel, hybrid and electric alike. The rate is 6.95 ISK per kilometre for vehicles up to 3,500 kg, rising in bands for heavier ones.
Can I choose which scheme applies to me?
Generally no — the rental company registers the vehicle, and its choice is what you inherit. Budget Iceland is the one company found that publishes both options to customers. For everyone else, the way to exercise choice is to pick a company whose scheme suits your mileage.
Did fuel get cheaper to compensate?
Partly. Fuel duty was removed at the same time and pump prices fell sharply in January 2026. A temporary VAT reduction on fuel then expired on 31 August 2026, and petrol rose about 23–24 ISK/L nationally; it now runs around 273 ISK per litre on the basket route (24 Sep 2026). For a typical petrol car the two changes broadly offset — the reform's purpose was to make electric vehicles pay for road use, not to raise the overall burden — but fuel prices move independently of the road tax and are worth checking closer to your trip.
Is it already in the price I was quoted?
It depends on the scheme, and this is where people get caught. Flat-daily companies generally show it as a line in the booking. Per-kilometre companies read the odometer at drop-off and bill afterwards — so it does not appear in your quoted total at all. If you did not see a road-tax line, assume it is coming later and ask.
Does it apply to electric cars?
Yes, in full, and EVs were the main reason for the reform. There is no exemption.
What about campervans and motorhomes?
The 6.95 rate and the 1,390 daily option both cover vehicles up to 3,500 kg, which includes most two-person campervans. Larger motorhomes can exceed 3,500 kg and fall into higher weight-banded rates — and they are also excluded from the daily fee, which is capped at 3,500 kg. Those band rates are not published in the guidance we could reach. If you are renting a large motorhome, ask for the exact per-kilometre figure for that vehicle class.
Which company is cheapest?
It depends on your mileage, which is why this page is a calculator rather than a recommendation. Under 200 km per rental day, a per-kilometre company is cheaper — Budget Iceland (cars) or Black Sheep Campers (campervans) at the bare 6.95 is cheapest of all. Over 200 km per day, a daily-fee company wins, with Lava, MyCar or Budget at 1,390 the cheapest for cars. Work out your own figure above.
What if I rent for more than 30 days?
The daily fee is only available on contracts of 30 consecutive days or less. A longer rental must sit on the kilometre fee, so expect per-kilometre charging on anything over a month.
Do I have to report anything myself?
Not on a short-term rental. The registered owner is liable, and where a vehicle is leased the liability moves to the registered lessee, with both jointly responsible — so the rental company handles registration, odometer reporting and monthly filings. Icelandic vehicle owners log readings at least annually through the Ísland.is app, the N1 app, or at inspection, and are invoiced monthly. Questions go to km@skatturinn.is.
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The rest of your Iceland budget
Road tax is one line, and rarely the one that ruins a budget.