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What is the New Iceland Road Tax in 2026 - Travel Tip Tuesday · Travel Mug Podcast

• 0:00
  Hey everyone and welcome back to Travel Tip Tuesday with the Travel Mug Podcast.
• 0:06
  As regular listeners know, we love Iceland, don't we, Meggan?
• 0:11
  We, we simply do We simply do.
• 0:13
  And you've done a few Iceland Road trips, is that correct?
• 0:19
  Two.
• 0:19
  Alright.
• 0:20
  Two.
• 0:20
  Yes.
• 0:21
  I've been twice and have never rented a car there.
• 0:23
  But, uh, you've done plenty of car rental in Iceland.
• 0:27
  So today I wanna talk about Iceland's new Road Tax that started at the beginning of 2026.
• 0:37
  So under this new road tax system, drivers in Iceland pay a per kilometre road tax that helps to fund road maintenance.
• 0:47
  And yes, this does apply to tourists, too.
• 0:52
  So if you're renting a car in Iceland in 2026 or beyond, listen up.
• 0:58
  I'm gonna tell you how it works.
• 1:00
  So how you pay this tax depends on the rental company that you're renting a car from.
• 1:07
  Some companies are charging a fixed daily rate that's added to your reservation.
• 1:12
  Other companies are charging you per kilometre driven.
• 1:16
  So I decided to go online and look and see what some people were doing.
• 1:21
  , What they're charging right now, this is April, 2026 when we're, uh, recording this.
• 1:26
  So it's current, but I don't know what it'll be in the future.
• 1:30
  Subject to change.
• 1:33
  Thank you.
• 1:33
  So, uh, Avis and SIXT are charging, uh, 6.95 Icelandic kroner per kilometre, which is about 8 cents Canadian per kilometre, or 6 cents US dollars, or, how do I say this?
• 1:52
  cents Euro 5 cents zero.
• 1:56
  5 cents Euro.
• 1:57
  I love it.
• 1:58
  cents Euro.
• 1:59
  I think that's, know.
• 2:00
  I'm so sorry.
• 2:02
  Um, so Cars Iceland, Lotus Car Rental and Blue Car Rental are charging 1,550 Icelandic kroner per day, which is about $17 and 42 cents.
• 2:17
  Canadian $12 and 59 cents US dollar or 10 Euro 78.
• 2:25
  So.
• 2:26
  Uh, the per kilometre rentals, you don't need to like record anything.
• 2:30
  There's nothing you have to do.
• 2:32
  The company will calculate your usage based on the odometer reading, uh, when you pick it up and when you drop it back off.
• 2:41
  So I did just wanna like give some context.
• 2:44
  So if you drive the Golden Circle, it's 250 kilometres, you're going to pay 1,737.
• 2:53
  50 Icelandic kroner.
• 2:56
  No.
• 2:56
  Is that right?
• 2:57
  Yeah.
• 2:58
  Oh my gosh.
• 2:59
  Don't ask me to do math here, people.
• 3:02
  No currency today.
• 3:03
  People, no currency.
• 3:04
  Currency math is so hard.
• 3:06
  So I do wanna note that you might read that Icelanders need to report their car usage to the government.
• 3:13
  You do not have to worry about that as a tourist, so that's very good.
• 3:17
  The rentals will do that part on your behalf.
• 3:20
  So you're probably thinking, great, this makes traveling to Iceland more expensive.
• 3:26
  But, I have good news for you.
• 3:29
  Iceland actually reduced fuel taxes to make up for this change.
• 3:34
  So it isn't going to make it a lot more expensive as gas is now cheaper.
• 3:42
  So Meggan, I wanna know your thoughts on this.
• 3:44
  If you were going to Iceland and renting a car, would you prefer to pick a company that was offering a per day charge or a per kilometre rental?
• 3:55
  I would just do some simple calculations.
• 3:58
  So if we are doing a road trip, we always, usually just for funsies, like plot it on Google Maps, and of course there's going to be a little bit over if you're local and driving around or whatever.
• 4:09
  But I'm talking like major destinations around Iceland.
• 4:11
  I would just plot it like we did 16 and 1800 kilometres on both trips.
• 4:16
  So then we would calculate how much is that per day and how much is that per kilometre?
• 4:21
  And then probably go with one of them, but we did the calculations and , for like, let's say our last trip, we were talking about it, and we probably would've saved about $8 a day if we went per kilometre.
• 4:32
  Interesting.
• 4:34
  I think if, if it really matters to you.
• 4:36
  Um, now some people, of course, who buy like extended warranties, et cetera, will probably go with the whole per day because it seems safe.
• 4:44
  But you actually do calculations you can figure out what is actually cheaper and if that matters, I would go with that.
• 4:50
  But even before in, in instinct, before I knew how much we had driven, I thought, well, per kilometre, because I wanna be charged, what I'm actually driving for.
• 4:59
  Hmm, that makes sense.
• 5:01
  Yeah, I agree.
• 5:02
  I think that I am like slightly risk averse in the same way that I would, I would naturally go for like the the per day just so that I know exactly what I'm paying.
• 5:14
  But you're right, if you do the math and the math Makes sense.
• 5:17
  Do the per kilometre charge shouldn't do the math, have someone else do the math, but whatever.
• 5:23
  Correct.
• 5:23
  If you have someone else do the math.
• 5:27
  Don't mind me over here.
• 5:29
  Um, so that is it for this week's Travel Tip Tuesday.
• 5:32
  I hope that helped clear up some of the information out there about what this is and how it works.
• 5:39
  Let us know what you think.
• 5:40
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• 5:47
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• 5:51
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• 5:53
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• 5:57
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• 6:00
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• 6:05
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