Iceland's kilometer fee for rental cars (2026 and 2027)
Last updated: 8 November 2026
Prepared by Ring Road Cars at Keflavík Airport and checked against the official sources listed at the end of this page.
Short answer
Since 1 January 2026 Iceland charges a kilometer fee (kílómetragjald) on every vehicle. Rental companies can pay it as an official daily rate instead: ISK 1,390 per started rental day in 2026. The government's 2027 budget bill proposes ISK 1,610 from 1 January 2027 (not yet law). At Ring Road Cars the road-use charge is €10.50 per started day in 2026 and €12 from 1 January 2027, shown next to every price — no meter, and no bill after your trip.
What the kilometer fee is
Iceland's road income used to come mostly from duties on petrol and diesel. With more electric and hybrid cars on the road, the state switched on 1 January 2026 to a kilometer fee on every vehicle, whatever its fuel (Act no. 100/2025). Owners log their odometer reading and pay per kilometer: ISK 6.95 per km in 2026 for vehicles up to 3.5 tonnes.
Rental cars have a simpler option. A licensed rental company can pay a fixed daily rate for each started rental day instead, based on an estimated 200 km a day. The daily rate is then the final kilometer fee for that rental, however far the car is driven.
The official rates in 2026 and 2027
| Rate | 2026 | 2027 |
|---|---|---|
| Kilometer fee, per km | ISK 6.95 | ISK 8.05 (proposed) |
| Daily rate for rental cars, per started day | ISK 1,390 | ISK 1,610 (proposed) |
| Status | In force since 1 January 2026 | In the 2027 budget bill; law only once Parliament passes it |
The 2027 figures come from the government's bill on changes to various laws for the 2027 budget (Alþingi, 158th session, case 2). Parliament usually passes the budget in December; we will update this page when it does.
What you pay with Ring Road Cars
We pay the official daily rate for every car and show it as one line, the road-use charge:
- €10.50 per started rental day for days in 2026, and €12 per started rental day from 1 January 2027.
- Each started day is charged at the amount for its own year: a rental from 29 December 2026 to 4 January 2027 costs 3 × €10.50 + 3 × €12 = €67.50.
- The charge is the official daily rate passed on without markup or VAT, plus our processing charge including VAT (rental terms, clause 41).
- It is shown next to every price and as its own line in your quote. There is no odometer reading and no bill after your trip, however far you drive.
Why our 2027 amount is already set
We are already taking bookings for 2027, so we set the 2027 charge in advance: €12 per started day. The amount in your booking confirmation is the amount for your booking.
Examples
| Rental | Road-use charge |
|---|---|
| 5 days in November 2026 | 5 × €10.50 = €52.50 |
| 7 days in March 2027 | 7 × €12 = €84 |
| 6 days, 29 December 2026 to 4 January 2027 | 3 × €10.50 + 3 × €12 = €67.50 |
The charge does not depend on distance: driving the whole Ring Road (about 1,310 km) costs the same as staying near Reykjavík.
Other road costs
The kilometer fee is separate from tolls and parking. Route 1 has two tolls — the Vaðlaheiðargöng tunnel near Akureyri and the Hornafjarðarfljót bridge near Höfn — while the Hvalfjörður tunnel is free. Parking is paid in central Reykjavík, at Keflavík Airport and at some nature sites. All of it is explained in Tolls, parking & entrance fees.
Questions about the kilometer fee
Do tourists pay the kilometer fee in Iceland?
Not directly: the vehicle's owner pays it. Rental companies pass it on — at Ring Road Cars as the road-use charge of €10.50 per started rental day in 2026 and €12 from 1 January 2027, shown next to every price.
How much is the kilometer fee for rental cars in 2026?
The official daily rate for rental cars is ISK 1,390 per started rental day in 2026, based on an estimated 200 km a day. The general kilometer fee is ISK 6.95 per km.
Will the kilometer fee go up in 2027?
The government's 2027 budget bill proposes raising the daily rate for rental cars to ISK 1,610 from 1 January 2027. It becomes law only once Parliament passes it. Our road-use charge for 2027 is set at €12 per started rental day.
Do I pay more if I drive the whole Ring Road?
No. The road-use charge is per started rental day, not per kilometer, so the distance you drive makes no difference.
Is the road-use charge included in your prices?
It is shown next to every daily price, so you can compare prices like for like, and it is its own line in your quote. The quote total includes it.
Official sources
The facts on this page come from these official sources (checked 8 November 2026):