Icelandic gasoline taxes up over 20% amid inflation

Fuel taxes on gasoline in Iceland have surged by more than 20% this year compared to last, the Icelandic Automobile Association (FÍB) reported. The association attributes the significant increase partly to a system change implemented at the beginning of the year, which replaced fuel duties with a kilometer tax.

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There is a considerable difference in gasoline taxation between years. With the system change at the turn of the year, when kilometer tax replaced fuel duties, the taxation per liter increased significantly when recalculated to today's prices.

This shift has substantially raised the tax levied per liter of gasoline. The average tax for the first five months of 2026 is projected to exceed 70 Icelandic krónur per liter. This compares to an average of 58 krónur per liter for all of 2025 (adjusted for inflation) and 55 krónur per liter in 2024 (also inflation-adjusted).

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The taxation on gasoline this year is over 20% higher than last year at the same time, while society is struggling with high inflation.

FÍB highlighted the increase comes at a time when Icelandic society is grappling with high inflation. The association pointed out that the largest shareholders in oil market companies are pension funds, questioning their social responsibility. FÍB suggested a national consensus is needed to limit excessive taxation on essential goods.

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The largest owners of companies in the oil market are pension funds, where is the social responsibility of the owners of these companies? Is there not a need for a national consensus to limit excessive taxation on essential goods?