Summarise
- Iceland introduced a mandatory kilometer-based road tax effective 1 January 2026 that applies to all vehicles, including rental cars.
- The tax replaces part of the traditional fuel tax and is calculated per kilometer and vehicle weight.
- It is a government-mandated fee, not a surcharge set by Thrifty, designed to fund road maintenance and infrastructure.
- Thrifty’s charge includes two parts: the government road tax and a Thrifty service fee for processing and reporting.
- The road tax is shown as a separate line item on your rental agreement and final invoice.
- The road tax does not include other travel costs like tolls, parking fees, entrance charges, or fines.
- All drivers in Iceland — residents and visitors alike — are required to pay this tax when using the roads.
From 1 January 2026, Thrifty Car Rental Iceland applies a mandatory Road Tax Fee on all rentals in line with Iceland’s national kilometer-based road-usage system (“kílómetragjald”). This is a government-mandated change that replaces part of the traditional fuel tax with a usage-based model calculated per kilometer and vehicle weight. The tax applies to all vehicles using Icelandic roads, including rental cars, and affects both residents and visitors. It is not an internal surcharge set by Thrifty, but a legal requirement designed to fund road maintenance and future infrastructure.
The Road Tax does not replace tolls, parking fees, entrance fees, or fines, which remain separate pay-as-you-go costs.
How Does Thrifty Charge The New Kilometer Road Tax?
The charge applied to your rental agreement consists of two clear parts:
- Government Road Tax: The mandatory fee set by the Icelandic Parliament.
- Thrifty Service Fee: Covers the administrative cost of processing, reporting, and remitting these taxes to the government.
| Rate (Per KM) | |
| Government Road Tax | 6.95 ISK (Approx . 0.056 USD / 0.047 EUR) |
| Thrifty Service Fee | 1.40 ISK (+ VAT) (Approx . 0.011 USD / 0.0095 EUR) |
Who Pays This New Road Tax?
The Road Tax applies to all drivers in Iceland, including:
- Icelandic residents
- Visitors and tourists
Every rental vehicle contributes through this charge, just as domestically owned vehicles must pay under the new law.
What the Road Tax Does Not Cover
It’s important to note that the Road Tax is separate from other common travel charges, such as:
- Toll roads (e.g., the fee for tunnels)
- Parking fees
- National park entrance charges
- Traffic or parking fines
Those fees are paid directly to the relevant operators or authorities and are not included in the Road Tax amount.
Where Can I See The Charge?
The Road Tax appears as its own line item at these points:
- On your rental agreement at the check-in desk
- On your final invoice after drop-off
This clear separation helps show exactly what portion of your total cost is the government-mandated tax versus your actual rental service.
Iceland Road Tax 2026 – FAQ (Thrifty Car Rental Iceland)
- When does the new Road Tax come into effect in Iceland?
The new road usage tax applies from 1 January 2026 and affects all vehicles driving on Icelandic roads, including rental cars.
- Does the Road Tax apply to rental cars?
Yes. All vehicles using Icelandic roads are subject to the Road Tax, including cars rented from Thrifty Car Rental Iceland.
- Where will I see the Road Tax on my booking?
The Road Tax is shown as a separate line item on your rental agreement at the check-in desk, and final invoice, so it is clearly distinguished from the rental price.
- Why is Iceland introducing this Road Tax?
As vehicles become more fuel-efficient and electric, fuel taxes alone no longer cover road maintenance costs. The Road Tax ensures all road users contribute fairly, regardless of vehicle type or fuel source.