Rent a car and self-drive touring around Iceland is no doubt the best way to travel Iceland. Knowing what to do and how to rent a car in Iceland might be the first thing you might be interested in, but after that, more ‘technical’ problems might come to your mind–are there any extra fees I need to pay on the road? If so, how much are they? How can I pay? Do I need a credit card or pay in cash?
To help you learn more about how to drive in Iceland and get well prepared before your arrival, we have all information about tunnels and tolls in Iceland and how to pay tolls in Iceland ready for you here, buckle up, Let’s Go.
New Road Usage tax in Iceland starting 2026
In Iceland, road maintenance has traditionally been funded through taxes included in the price of petrol and diesel, so the more fuel a vehicle used, the more its owner contributed to road upkeep.
As electric, plug‑in hybrid and other highly efficient vehicles became more common, this fuel‑only system no longer captured all road users fairly. To solve this, Iceland is introducing a kilometer‑based road usage system so that all vehicles help fund the road network, regardless of fuel type.
What is the Road Tax?
The Icelandic government is replacing part of the traditional fuel‑based road tax with a usage‑based system (“kílómetragjald”) that is calculated per kilometer driven and varies by vehicle weight.
All vehicles using Icelandic roads, including rental cars, must now contribute through this kilometer‑based road charge to help fund road maintenance and future infrastructure.
How Hertz Iceland charges the Road Tax
Hertz Iceland handles all the necessary reporting and payments to the Icelandic authorities on your behalf, ensuring your rental is fully compliant with the new laws. The charge is applied based on kilometers driven and consists of two parts: the mandatory government tax and a service fee to cover the administrative workload of processing these payments.
The Road Tax & Service Fee structure is:
- Government Road Tax: 6.95 ISK per kilometer
- Hertz Service Fee: 1.40 ISK per kilometer (+ VAT)
Total charges are calculated based on your vehicle’s usage during the rental period.
Is this tax unique to Hertz Iceland?
No. The kilometer‑based road tax is a national Icelandic system and applies to all vehicles in the same weight category, regardless of rental brand, fuel type or ownership. Hertz Iceland’s role is simply to collect and remit the applicable charge for your rental car and show it clearly on your rental agreement and final invoice.
Which vehicles and drivers does it apply to?
The tax applies to all standard passenger cars and SUVs under 3.5 tons, as well as heavier vehicles in higher weight brackets, with rates set by law for each category. It affects both Icelandic residents and visitors, including tourists renting a vehicle from Hertz Iceland for a short city break or a longer Ring Road trip.
Does the Road Tax replace tolls, parking or fines?
No. The Road Tax does not include or replace:
- Tunnel or road tolls (for example, Vaðlaheiðargöng)
- Parking fees in towns, cities or nature destinations
- Entrance fees to private or protected areas
- Traffic or parking fines
These charges remain separate, pay‑as‑you‑go costs that you pay to the relevant operator or authority, and any fines are processed according to local regulations.
How will the Road Tax appear on my booking?
The Road Tax is shown as a separate line item on:
- Your rental agreement at pick‑up
- Your final invoice after drop‑off
This separation is intentional so you can clearly see which part of your total cost comes from Hertz Iceland’s rental price and which part is the mandatory Road Tax & Service Fee linked to Icelandic road‑usage legislation.
Will I be charged extra later based on my exact kilometers?
Under the national system, kilometer charges are strictly based on odometer readings. Hertz Iceland handles all strict odometer reporting to the Icelandic authorities. You simply pay the Hertz Iceland Road Tax & Service Fee based on the rules in your rental agreement; you do not need to submit odometer data or pay a separate bill directly to the government yourself.
Why is there a Road Tax if I already pay for fuel?
As more vehicles become efficient or fully electric, traditional fuel taxes alone no longer cover the cost of maintaining Iceland’s extensive road network, especially in remote and high‑tourism areas. The kilometer‑based road tax ensures that all road users contribute fairly, regardless of fuel type, so visitors in rental cars and local drivers pay under the same national framework.
The ONLY Tolled tunnel in Iceland: Vaðlaheiðargöng tunnel
99.9% of the roads in Iceland are toll-free, only with one exception–the Vaðlaheiðargöng tunnel. Vaðlaheiðargöng tunnel was newly opened in 2020 in north Iceland outside Akureyri city. This tunnel connects the east bank of the Eyjafjörður fjord and Akureyri, which shortened the Route 1 Ring Road by 16km.
Vaðlaheiðargöng tunnel location Map
Toll price in Iceland
There is a fee per trip for each car to use the Vaðlaheiðargöng tunnel:
- Regular passenger car under 3.5 tons: 1,850 ISK per trip (one-way)
- Vehicles weight between 3.5 to 7.5 tons: 2,800 ISK per trip (one-way)
- Vehicles weight over 7.5 tons: 5,900 ISK per trip (one-way)
*Info updated April 2024
How to pay tunnel toll in Iceland?
The fee is required to be paid in full within a 24 hours time frame with a valid credit card online. You can pay for your single tip via the veggjald.is website here or with their official app ( Apple iOS; Android) after passing through the tunnel; OR, you can also pre-register your rental car’s license plate number details on the same website 24 hours before your trip and pre-pay the fee.
You will be fined if you cannot pay the toll fee online within 24 hours after (or before) using the tunnel.
A kind reminder to Hertz Iceland’s renters: the expense of toll fees and parking fees are on your own terms; please pay accordingly. If you failed to make your payments, Hertz Iceland would receive the cost+ fined tickets, and we would have to charge you the fined amount with an admin service fee.
Does it worth using the tolled tunnel?
The tunnel saved you from driving through the Víkurskarð road, a pass in the mountain range between the Svalbarðsströnd coast and Fnjóskadalur.
In summer (between late May and early September), the Víkurskarð road is relatively easy to drive with no stress when the snow is melted. By using the Vaðlaheiðargöng tunnel, you can enjoy a more effortless drive experience and a few minutes faster than the Víkurskarð road. If you are travelling along the Ring Road in summer, there is no absolute difference between using the tunnel and the Víkurskarð road.
In winter (between late September and early May), North Iceland will start snowing, and roads will become icy, snowy and challenging to drive; this also happens to Víkurskarð road. Sometimes, the Vikurskard road is even impassable in winter due to heavy snowfall and strong winds. If you are taking the Ring Road trip during winter, we highly recommend you take the Vaðlaheiðargöng tunnel when travelling between Akureyri and Godafoss.
Free Tunnels in Iceland
As mentioned, the Vaðlaheiðargöng tunnel is the ONLY tolled tunnel in Iceland. You will be able to use all of the tunnels listed below for free during your stay in Iceland:
- Hvalfjörður Tunnel: a tunnel used to be a tolled road but has been toll-free since late 2018. This tunnel is laid under the Hvalfjörður fjord, connecting Reykjavik and the west, and it is part of Route 1 Ring Road.
- Arnardalshamar Tunnel: Arnardalshamar tunnel is located in the Westfjords area along Route 61 and cuts through a basalt dike named Arnardalshamar. It is the shortest and oldest artificial tunnel in Iceland.
- Strákagöng Tunnel: Another tunnel located in Westfjords outside of Siglufjörður town, making the village more accessible during the winter season
- Héðinsfjarðargöng Tunnel: Hédinsfjardargöng are two tunnels, a 3.9-kilometer long tunnel between Siglufjördur and Hédinsfjördur and a 7.1-kilometer long tunnel between Hédinsfjödur and Ólafsfjördur.
- Múlagöng Tunnel: A tunnel located in East Iceland, connecting the towns Dalvík and Ólafsfjörður.
- Breiðadals & Botnsheiði Tunnels: It is a tunnel with a crossroads inside it. Located in Westfjords, the tunnel starts from Isafjordur and connects Suðureyri and Flateyri towns. You can easily access these two different towns at the crossroads in the tunnel from Ísafjörður.
For further tips on how to drive in Iceland safely, read our Driving in Iceland guide and learn everything about driving in Iceland.
