The price of fuel has already dropped by more than a third since midnight.
The new mileage tax will apply to all vehicles, regardless of whether they run on petrol, diesel or electricity. Charges are the same for all cars and SUVs weighing up to 3.5 tons.
Owners of large SUVs, will pay less overall compared to before, while drivers of smaller, fuel-efficient cars will face higher annual costs.
Seems like a bad tax. It has no policy benefit but is simply a revenue source and in that case it would make more sense to put it into general taxation.
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The change was approved under the government of Prime Minister Kristrún Frostadóttir, and [comes into force today, 1 January 2026](https://www.icelandreview.com/news/iceland-to-introduce-weight-based-mileage-tax-for-all-vehicles/).
The price of fuel has already dropped by more than a third since midnight.
The new mileage tax will apply to all vehicles, regardless of whether they run on petrol, diesel or electricity. Charges are the same for all cars and SUVs weighing up to 3.5 tons.
Owners of large SUVs, will pay less overall compared to before, while drivers of smaller, fuel-efficient cars will face higher annual costs.
Seems like a bad tax. It has no policy benefit but is simply a revenue source and in that case it would make more sense to put it into general taxation.
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