Driving in Iceland: complete guide for a road trip, all useful tips

Driving in Iceland is, in most cases, the only way to truly experience this country and its most remote and beautiful corners. In this guide, I’ll tell you everything you need to know before getting behind the wheel in Iceland, with precise updates for 2026, including the new per-kilometer tax that came into effect in January 2026.

Why the car is the best way to visit Iceland

Iceland has a long-distance bus network (such as Strætó). Still, the service is reduced from September to May, when trips are often limited to weekly runs or are suspended altogether due to environmental conditions. In some cases, and regardless of the season, public transport doesn’t reach the most remote areas, making it impossible to visit and discover them without your own vehicle.

With a car at your disposal, on the other hand, you decide where to go, when to leave, where to stop along the way, how much time to dedicate to each stop, whether to modify your itinerary in real time according to the weather (which is fundamental in Iceland), or when to return to your accommodation.

There are only two cases, in my opinion, where you can do without: if your plan only includes Reykjavik and its surroundings (you can use public transport) or organized tours. But if you want to explore Iceland (the real one) independently, a car is essential.

How to choose the right vehicle: the guide

This is probably the most important decision of your trip to Iceland and also the one where it’s easiest to make a mistake. Not all cars are suitable for all routes or authorized on all roads, so it’s important to know the differences.

For my trip (in May) I rented the vehicle with IceRental4x4, a local partner who proved to be extremely reliable and in multiple languages, ideal for travelers not fluent in Icelandic. Their office is at Keflavík airport, very convenient for picking up and returning the car right at the start or end of your trip. By clicking on the link you can check their fleet (consisting of compacts, 4x4s, campers, and vans up to 9 seats), availability, and choose the most suitable vehicle for your itinerary.

Standard car (2WD): when it’s enough, when it’s a risk

A standard traction car is sufficient if your plan is to follow the Ring Road (Hringvegur) during the summer months, stick to the main paved roads, and not venture into remote areas. However, be careful, because it becomes risky or even a legal problem if:

• you want to travel F-roads (highland roads), as it is prohibited by law;
• you travel in autumn, winter, or spring, when snow or ice are frequent;
• you plan routes to remote areas far from the Ring Road;
• the weather suddenly worsens (with a 2WD you have less safety margin).

SUVs and 4x4s: when they are mandatory, not just recommended

If you are traveling in autumn, winter, or spring, and if, in summer, you want to drive on secondary roads and F-roads, know that having a 4×4 is mandatory. When making your choice, keep in mind not only this feature, but also the types of SUVs, because they are not all the same and have some limits:

• Compact SUV (like a Dacia Duster or a Suzuki Vitara): lower price, but also lower ground clearance;
• Midsize SUV (like Nissan X Trail, which I chose for my trip, or Hyundai Tucson): a great middle ground that gives you plenty of freedom, but is not suitable for deep fords;
• Large SUV: although it can accompany you on any type of route, it has higher costs and fuel consumption.

Some SUVs also come with rooftop tents, ideal for a totally independent experience.

Camper: the third option for those who want maximum freedom

The camper is very popular for driving in Iceland and exploring the island, especially in summer, because it allows you to sleep anywhere in authorized campsites (wild camping outside designated areas is prohibited), without booking accommodations in advance and having total flexibility with schedules. The main drawbacks are maneuverability on narrow roads and the wind, which in Iceland can be very strong and make driving a tall vehicle challenging.

Minimum age, documents, and credit card

Most Icelandic rental companies require a minimum age of 20 to 23 years, with some companies setting the limit at 25 years for large SUVs. Always check before booking.

For the rental, you will necessarily need a credit card (not prepaid, not debit) for the security deposit. The amount held varies from about €200 to €500, depending on the vehicle category and the type of insurance.

Do you need an international driver’s license to drive in Iceland?

No, an International Driving Permit (IDP) is generally not required for short-term tourist stays (up to 90 days), provided your domestic driver’s license meets a few basic conditions. To be legally valid for driving or renting a car in Iceland, your national license must:

• Be currently valid and remain so for the entire duration of your trip.
• Display a license number, a clear photograph of you, and an expiry date.
• Be printed in Latin characters (the standard alphabet used in English, Italian, Spanish, etc.).

When DO you need an IDP? If your domestic driver’s license is written in a non-Latin script —such as Arabic, Chinese, Cyrillic, Greek, Japanese, or Korean— you must present an International Driving Permit alongside your original, physical license. The IDP serves as an officially recognized translation and is not valid on its own

PRO TIP: While Icelandic law allows you to drive with any valid Latin-character license, a few specific rental agencies may have internal policies requiring an IDP for non-EU/EEA license holders (like travelers from the US, Canada, or Australia). It is always a good idea to double-check your specific rental company’s terms before arriving! If you rent your car with IceRental4x4, don’t worry, your Latin-character license is enough.

What other documents are needed to drive in Iceland?

In addition to a valid driver’s license, always carry your passport or identity card (usually accepted in Iceland), a credit card in the name of the main driver, the signed rental contract, and the booking voucher, as well as all insurance documentation. Keep everything accessible in the car during the trip in case of checks by the Icelandic police.

What are Iceland’s roads like?

Iceland has about 13,000 km of roads, but not all of them are what they appear to be on Google Maps. Before setting off, it’s crucial to understand what types of roads exist, which ones you can drive on with your vehicle, and at what time of year.

• The Ring Road (Road 1 — Hringvegur): This is the main artery and backbone of any Icelandic road trip, as it circles the entire island for 1,332 km. It is almost completely paved, well-maintained, and can be traveled with any type of vehicle during the summer months. Don’t expect a highway, though: the Ring Road is a single-lane road in each direction with a speed limit of 90 km/h.
• Secondary roads (numbered with 2 to 4 digits): A significant portion of Iceland’s secondary roads are gravel, with a speed limit of 80 km/h, although in practice it’s often best to keep it to 60–70 km/h. In good weather, these roads can also be traveled with a regular car, but caution is needed because windshield chipping from rocks thrown up by passing cars is very common, and there are some risks or stretches where greater caution is needed, which I’ll discuss further below.
• F-roads (identified by the letter F followed by a number, e.g., F35 or F26): These are the highland roads of Iceland, among the most spectacular and unspoiled places in Europe. If you drive on them, keep in mind that 4×4 is absolutely required by law, they are subject to seasonal openings, and in some cases they cross rivers without bridges; you must therefore assess the depth of the ford before entering the water, always in relation to the vehicle you have chosen. Also, remember that you might not find a fuel station for dozens and dozens of kilometers—always fill up when you have the chance (especially if you plan to travel remote and isolated roads).

Road rules and prohibitions to respect (and the hefty fines if you don’t)

Driving in Iceland is a key experience during a trip to the island, but, as in every country, always remember there are precise rules and prohibitions to respect.

• Speed limits: 50 km/h in urban areas, 80 km/h on gravel roads, and 90 km/h on paved roads outside urban areas. Authorities use both fixed and mobile speed cameras. Fines for speeding are steep: exceeding the limit by 20 km/h can cost 60,000–90,000 ISK (about €430–640).
• Low beam headlights: must remain on in any light condition, 24 hours a day. This applies even during the midnight sun in July when it looks like broad daylight at 3 a.m. Most rental cars have automatic headlights, but check before setting off.
• Alcohol: The legal limit is 0.50 g/l of blood alcohol (equivalent to 0.05%), and Icelandic culture is extremely strict about drinking and driving, with frequent checks.
• Cell phone use while driving: Prohibited, exactly as in Italy. The fine is about 35,000 ISK (about €250). Always use hands-free, headphones, or a phone holder (if you need to check maps), or ask your travel companions for help.
• Off-road driving (off designated tracks): strictly forbidden. The volcanic soil, moss, and Icelandic vegetation are extremely fragile and can take decades to recover from a single tire track. Fines go up to 500,000 ISK, about €3,600.
• Children: A car seat is mandatory for children under six.

Typical dangers of driving in Iceland

There are some specific risks to Icelandic driving that you’ll hardly find elsewhere in Europe.

• Black ice: Thin, nearly invisible layers of ice on the asphalt are extremely dangerous in autumn and winter, so if your dashboard shows 0–3°C, treat every curve with maximum caution.
• Sudden side winds: In Iceland, the wind can go from 0 to over 80 km/h in minutes, so always keep both hands on the wheel and open car doors carefully (the wind can literally rip the door out of your hand and this damage is not covered by standard insurance). In some cases, the wind can be accompanied by ash and sand storms, which can damage the car’s bodywork; at-risk areas are usually marked with orange warning signs.
• Animals (especially sheep) on the road: Especially in summer, this is a possibility not to be underestimated. They are unpredictable, so avoid honking to scare them, proceed slowly and with caution.
• Sudden fog: In the highlands and on the coasts, fog can appear in minutes; if you can’t see the road, stop.
• Blind hills: Marked with signs reading “Blindhæd”, these often cause drivers to move toward the center of the road—always be careful.
• Single-lane bridges and tunnels: Bridges are marked with signs reading “Einbreiður brú”, and priority goes to the car closest to the bridge. For tunnels, the entry indicates which direction has priority, and inside there are usually two or three pull-outs; if you find one on your side and a vehicle is coming, you must pull over.
• Sudden changes in road surface: The transition from asphalt to gravel is marked with signs reading “Malbik Endar.”
• Fords: Marked with a “V”. Remember, a wide ford is often shallower; never cross near a waterfall, use a low gear (if the car is manual), maintain a steady speed, drive diagonally with the current, and choose early morning before the sun melts more snow or ice. Always assess the crossing based on your vehicle, as almost no insurance covers damage during river fording (if you get stuck, recovery is at your expense and can cost up to €5,000).

PRO TIP: How to check real-time road conditions? Use these three tools every morning before setting out, regardless of season: vegagerdin.is/umferdin.is, the official website of the Icelandic Road Administration, also available in English, which reports the status of every road, openings and closures, F-roads, and live webcams; Veður, the official Icelandic weather app, much more accurate than Google or Windy for local forecasts; and SafeTravel.is, where you can register your daily itinerary so that rescuers know where you are if you don’t check-in.

The new road tax 2026: everything you need to know

This is probably the most important news for those visiting Iceland from 2026 onward. In fact, from January 1, 2026, the country has introduced a per-kilometer fee for vehicles, replacing the traditional fuel excise taxes.

How does the per-kilometer system of the new Icelandic road tax work?

The system is officially called the “road usage fee” and came into effect on January 1, 2026. The base rate of 6.95 ISK per kilometer applies specifically to passenger vehicles with a gross weight under 3,500 kg (which includes almost all cars, SUVs, and small rental vans). For heavier vehicles, such as large campers that exceed this threshold, the rate is progressively higher.

This system was introduced mainly to include electric vehicles in contributing to road maintenance. With the rapid growth of electric cars in Iceland, these vehicles were previously completely exempt from fuel taxes.

Who has to pay the road tax?

The tax applies to all vehicles registered in Iceland, including rentals. There is no exemption for tourists, but it’s all very simple: the rental company handles it directly, so you will find it as an item on your quote or receipt.

How is it handled for rental cars?

Almost all Icelandic rental companies have adopted a fixed daily rate system to simplify management. Instead of calculating the exact kilometers traveled by each customer, they apply a flat rate of about 1,500–1,600 ISK per day (around €10–11) that covers average daily use. This item may appear on your invoice as “Road Usage Fee” or “Km Tax.” That’s what happened in my case: I paid 7,750 ISK.

Always check the terms of your rental contract: some companies include it in the total price, while others add it at return.

Electric, hybrid, or traditional car: what is the best option with the new tax?

With the introduction of the per-kilometer fee, many travelers wonder if renting an electric car is still worthwhile. The electric car remains an excellent choice for saving on “fuel” costs, since energy in Iceland is much more affordable than gasoline. However, my advice is to choose electric only if your route follows the Ring Road, where charging stations are frequent. If you’re heading to the Westfjords or Highlands, diesel, gasoline, or hybrid are the safest options.

Flat rate or kilometer calculation: what will it cost you?

You might wonder whether the daily flat rate (about 1,500 ISK) charged by rental agencies is fair. Doing the math, the flat rate is convenient if you average more than 215 km per day. For a classic 10-day Ring Road trip (about 1,500–2,000 km total with side trips), the flat rate and the actual consumption cost are very similar. The advantage of the fixed rate offered by agencies like IceRental4x4 is transparency: you know exactly how much you’ll pay at the time of booking, with no nasty surprises or kilometer recalculations when you return, leaving you free to add stops to your itinerary without worrying about the meter.

Seasons and road conditions: when is the best time to go

There is no wrong time to visit Iceland, but each season has very different characteristics for those driving. Here’s what to expect in general.

• Spring or autumn: fewer tourists, lower prices, and the Ring Road is almost always passable, while some F-roads begin to open or close. During these months, you must be prepared for variable weather conditions and, especially in autumn, possible snowfall at medium-high altitudes. A 4×4 is strongly recommended even if you’re not driving on F-roads. I recommend May or September as the best compromise between conditions and crowding. I visited Iceland in late May, which is technically still spring but very close to summer, and the main roads were in perfect condition, although we were notified of some road closures in areas that were not on our itinerary.
• Summer: this is the simplest and most permissive period for driving in Iceland. The F-roads are open, road conditions are generally good, and the days are incredibly long thanks to the midnight sun. The downside is that it’s the most crowded and expensive season. Book your rental car at least 3–4 months in advance, especially if you’re traveling in August and want an SUV.
• Winter: Icelandic winter is a unique experience, with northern lights, snowy landscapes, and frozen waterfalls, but winter driving requires preparation and a completely different approach. First of all, a 4×4 is not optional, but mandatory by law outside Reykjavik; daylight hours are reduced (so you must plan your movements accordingly); some sections of the Ring Road in the east and north can be closed due to snow; and the wind can be so strong as to make driving impossible in some coastal stretches.

Insurance for driving in Iceland: which to get?

Insurance is one of the most overlooked topics when booking a car and one that can have the most serious financial consequences. Here are the main coverages you’ll find and when it’s worth getting them.

• CDW (Collision Damage Waiver): the basic mandatory insurance. CDW is included in almost all car rentals as the minimum mandatory coverage. It covers damage to the vehicle in case of an accident but includes a deductible that can reach 300,000–500,000 ISK (€2,000–3,600). If an accident occurs, you pay the deductible.
• SCDW (Super CDW): zeroes or reduces the deductible. SCDW reduces the CDW deductible to zero or almost zero. It costs more (€10–25/day more), but it lifts a significant burden. For a trip to Iceland, especially on gravel roads or in winter, SCDW is almost always a worthwhile investment.
• Gravel Protection (GP): essential for gravel. Gravel (or Sand & Gravel) coverage covers damage caused by gravel to the bodywork and windows. In Iceland, it’s almost essential: gravel roads throw up stones that chip windshields and bodywork with surprising frequency. Without this coverage, any damage is at your expense.
• Sand & Ash Protection: for volcanic areas. If you plan to pass near active volcanic areas (such as Reykjanes or Vatnajökull), Sand & Ash coverage protects against damage caused by volcanic sand, which in strong winds can scratch the entire exterior paintwork of the vehicle.

What is never covered by any insurance

Regardless of how many policies you sign up for, there are damages excluded from almost all coverages:

• Damage occurring during river fording;
• Damage caused by driving off authorized tracks;
• Damage occurring on F-roads with an unauthorized vehicle;
• Damage caused by doors being violently blown open by the wind (in some policies);
• Collisions with animals (in many standard policies).

Always read the contract in full before signing and explicitly ask what is excluded to avoid nasty surprises!

What if you already have external insurance?

Many travelers have insurance coverage through their credit card or annual travel policies that cover the rental deductible. In this case, know that agencies like IceRental4x4 do not require you to purchase additional policies: the choice is entirely yours.

If you decide to use your external coverage, remember that in case of damage you will usually have to pay the deductible in advance to the rental company and then request reimbursement from your insurance. If you prefer to “travel worry-free” and eliminate immediate financial responsibility, the direct policies offered by the rental company remain the quickest option.

Budget and costs: how much does it really cost to drive around Iceland

Iceland is expensive, there’s no way around it, but with good planning, costs are predictable and manageable. For example, with IceRental4x4, daily rental costs start at €21 for a small car and go up to €214 for a van that can accommodate up to nine passengers.

These prices do not include additional insurance or the new 2026 per-kilometer tax. Book in advance: in high season, the best cars are booked out months ahead.

Fuel: prices and practical tips

Fuel prices in Iceland are lower than in some other European countries, for example, Italy. Check the GasPrices Iceland app to compare prices at different stations.

The N1 station chain is the most widespread, with uniform prices across the country and it accepts international cards without problems. Self-service (24-hour) stations only accept 4-digit PINs, so always bring a backup card if your PIN has more digits.

Before venturing into remote areas, always fill up, even if your tank is only half empty. On some stretches of the Ring Road, there are more than 100 km between stations.

Other costs: parking and tolls

Parking is mostly free in rural areas and along the Ring Road. Parking is subject to charges in the most popular national parks (such as Þingvellir, Skaftafell, and Jökulsárlón) and near major attractions, such as the stunning waterfalls along the southern coast, with fees ranging from 700–1,500 ISK per spot. Parking is also subject to charges in Reykjavik’s central districts. To pay, you can use the Parka or Easy Park apps (for city parking), which charge a small surcharge, or use the machines available in the parking lots. Be careful: paid parking lots do not have barriers to control entry and exit, but rather cameras that record license plates. Be sure to pay promptly, or you may face a fine.

As for tolls, there’s one classic example for those traveling the entire Ring Road: the Vaðlaheiðargöng tunnel, near Akureyri in northern Iceland. It runs for about 7.5 km under the mountain and allows drivers to avoid a winding and often problematic winter route. The toll for cars is currently 2,152 ISK (about €15) and must be paid online within 24 hours of use at veggjald.is. There are no physical barriers—the system is based on your license plate. If you don’t pay within the time limit, you’ll get a fine.

Now that you have all the information to drive in Iceland without being caught off guard, you’re ready to go. Safe travel!

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