Published on
November 2, 2025
Iceland’s new cruise tax, introduced in January 2025, has significantly impacted the country’s rural ports, leading to a sharp decline in cruise bookings and posing a serious threat to tourism growth. The tax, which requires cruise passengers to pay a daily fee of 2,500 ISK ($18), has already caused a drop in advance bookings by over 50% in some areas. This decline is particularly damaging for rural communities that depend on cruise tourism for economic stability. With fewer ships arriving and reduced visitor numbers, local businesses are struggling, raising concerns that this tax could undermine Iceland’s reputation as a premier cruise destination and hinder the growth of its tourism industry.
The immediate consequences of the tax are evident. Data provided by Cruise Iceland indicates a sharp drop in cruise ship calls across the country, with some ports experiencing a decline in advance bookings of over 50 percent for the years leading up to 2027. This dramatic shift is causing economic concern in areas that rely heavily on the influx of cruise tourists for their livelihoods. Small and rural communities are particularly vulnerable, as they depend on these visitors for local business revenue.
The new tax has been described as significantly higher than similar charges imposed by Iceland’s neighboring countries. As a result, there is growing concern within the cruise industry about the potential long-term effects of the fee on the country’s tourism market. While the tax was introduced as a way for Iceland to generate additional revenue and fund infrastructure improvements, its impact on the local economy and tourism industry is beginning to raise alarms.
Iceland has long been a favored destination for cruise ships, known for its stunning natural beauty, unique landscapes, and its position as a gateway for Arctic expedition cruises. The country’s popularity as a destination has made it a key port for mainstream cruise vessels, as well as for adventure-seeking travelers heading into the Arctic. However, with this new tax in place, there is a growing risk that cruise operators may seek alternative destinations with lower costs.
The new infrastructure tax is expected to generate significant funds for the government, with estimates suggesting it could bring in over $10 million. However, the increased cost to passengers has led to a reassessment of whether the financial gains will outweigh the potential losses in tourism. With many cruise operators exploring new routes and considering different destinations, the impact on Iceland’s rural tourism hubs remains uncertain.
Iceland’s new cruise tax, introduced in January 2025, has caused a sharp decline in bookings, especially at rural ports, threatening tourism growth. The daily fee of 2,500 ISK per passenger is significantly impacting local economies that rely on cruise tourism.
Cruise Iceland has expressed concern over the potential long-term effects of the tax and has submitted its findings to the country’s Parliamentary Committee on Economic Affairs and Trade. Industry leaders are urging the government to reconsider the potential ramifications of the measure, particularly its negative impact on smaller ports that are vital to the local economy.
As the situation continues to unfold, it is clear that Iceland’s cruise tourism sector faces a challenging period ahead. While the government hopes the tax will improve port infrastructure and generate much-needed funds, the broader effects on Iceland’s position as a premier cruise destination are yet to be fully realized. In the coming years, it will be crucial to monitor how this new fee influences both cruise line itineraries and the economic health of the country’s tourism-dependent regions.
