A new mileage-based vehicle tax has come into force in Iceland, requiring all vehicle owners to pay according to how far they drive rather than the type of fuel they use.
Vísir reports that the system applies to all vehicles, including petrol, diesel, hybrid, and electric cars, and came into effect on 1 January 2026.
Under the new rules, owners of passenger cars and motorcycles must register their mileage at least once a year, while truck owners are required to do so every six months.
The first deadline for registration is 20 January 2026, with mileage to be recorded through My Pages on Ísland.is or via the Ísland.is app.
New Tax System 
A truck drives down a winding road. Photo: Golli
The tax was approved by Alþingi in December. Vehicles weighing under 3,500 kilograms, the limit for standard driving licences, are subject to a uniform charge of ISK 6.95 per kilometre driven.
At the same time, fuel taxes are being reduced, partially offsetting the new mileage fee.
If mileage is not registered by the January deadline, charges for January will be calculated using estimated average driving figures. The first invoice will be issued on 1 February, with payment due 14 days later.
Vehicle owners who fail to register mileage by 1 April will be charged a non-registration fee of ISK 20,000. After that date, electronic registration will no longer be possible, and the vehicle must be taken to an inspection station for an official odometer reading.
The fee may be waived if the inspection is completed within 30 days of assessment.
Mileage must also be recorded when ownership of a vehicle changes, with the buyer required to confirm the odometer reading. Responsibility for mileage-based charges then transfers to the new owner from the following day.