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Money in Iceland, sorted.
A calm, current plan for the money side of your trip: why you can go the whole way without cash, why it is krona and not euros, the shopping tax you can claim back, the small nightly lodging tax, and the new road tax that can surprise anyone renting a car.
From 1 January 2026 Iceland replaced part of its fuel tax with a per-kilometre road tax on all vehicles. The government rate is about 6.95 ISK per km, but rental companies typically add an admin margin (often around 8.8 ISK per km), so a full Ring Road loop of roughly 1,500 km can add about 13,200 ISK (around 105 dollars), usually billed to your card after you drop the car off. Separately, the nightly lodging tax rose to 800 ISK per hotel room in 2025.
The three things people ask
Will my card work? Do I need cash? Are ATMs easy?
The quick read for a first trip.
Your card
Works almost everywhere
Visa and Mastercard are near-universal, with contactless and Apple or Google Pay standard, on fuel pumps, in cafes, on tours and at remote guesthouses. Amex is accepted at bigger hotels and shops but is patchier, so bring a Visa or Mastercard as your main card. A no-foreign-fee card covers the whole trip.
Check yours →Cash
You barely need any
Iceland is one of the most cashless countries anywhere. Keep maybe 3,000 to 5,000 ISK for a rare cash-only moment, but many visitors never use it. Do not change a big pile of dollars into krona; you will struggle to spend it and lose money on the way back.
How much to bring →ATMs
Use a bank machine, rarely
If you want a little cash, use a bank ATM (Landsbankinn, Islandsbanki, Arion), common in Reykjavik and towns but thin in the countryside. Read the on-screen fee, take a small amount, and always decline "convert to US dollars." Your own bank's foreign-ATM fee usually matters more than the machine's.
See ATMs in Iceland →(opens in a new tab)Cash or card
About as cashless as anywhere on earth; the real cost is the prices.
A rough feel for everyday spending. Cards and contactless cover essentially everything: hotels, restaurants, fuel, tours, museums, even tiny rural stops and honesty-box farm stands increasingly take cards. Cash is a small just-in-case backup, nothing more. The thing to plan for is not cash at all, it is how much everything costs, so pad your daily budget rather than your wallet.
See what the trip really costs →Your money plan
Four steps and you're set.
Before you go
- Bring a no-foreign-fee Visa or Mastercard with contactless for nearly everything, plus a backup card from a different bank.
- Get a no-foreign-fee debit card (Charles Schwab, Wise or Revolut) for the rare cash you might pull, though you may never need it.
- Renting a car to tour? Sort the insurance and read the fine print: gravel and sand-and-ash protection matter here, and the new per-kilometre road tax is billed after you return the car (see below).
- You do not need travel insurance for money reasons, but standard travel medical cover is always sensible, especially if you plan to hike or drive the Highlands.
At the airport
- Skip the exchange counters at Keflavik. You can start tapping your card immediately, including for the Flybus or a rental car.
- If you want a little cash, pull it from a bank ATM and decline "convert to dollars." A small amount goes a long way, since you will rarely spend it.
- Set up an eSIM before you land (Airalo, Nomad, or a Siminn prepaid plan). Coverage is strong around Reykjavik, towns and the Ring Road, thinner in the interior Highlands.
- Doing the VAT refund on the way out? Get forms stamped and refunded at the desk in the arrivals hall before you check bags, not after.
Day to day
- Tap your card or phone for everything: fuel, food, tours, museums and admissions.
- Prices already include VAT, so the number on the tag or menu is what you pay.
- Driving? Download the parking apps (Parka, EasyPark) before your first stop, since many popular sites charge for parking with no booth, only a camera.
- Always choose ISK, never dollars, on every card terminal and ATM screen.
A golden rule
- It is krona, not euros, and always pay in krona. Choosing dollars (dynamic currency conversion) quietly adds 3 to 8%, and euros do not spend here.
- Budget high. A coffee, a bowl of soup or a short tour all cost more than you expect, so plan a bigger daily number than almost anywhere else in Europe.
Staying connected
Will my phone work here? And what will it cost?
Strong in and around Reykjavik, the towns and most of the Ring Road, where you will have solid 4G and wide 5G. The three networks are Siminn (the widest reach), Vodafone Iceland and Nova. Coverage thins in the interior Highlands, some fjords and mountain passes, so expect dead zones if you go off the ring. A prepaid SIM is cheap, and eSIMs from Airalo, Nomad or Siminn are the easy route. Your US plan may include some roaming, so check the rate first. You do not need mobile data to pay by card, but you will want it for maps, weather and road conditions, and the 112 app is worth having for safety in remote areas. The cost is where people get caught out, and on most US plans it lands in one of two buckets.
Your plan may already include it
Often, do nothing
Some US plans include slow data abroad at no extra cost. If that is you, the honest move is to leave it alone.
we earn nothing
Or it charges quietly, after the fact
The bill lands later
On pay-per-use plans the cost runs in the background while you travel, and the charge can show up weeks after you are home. Forgetting to switch off data roaming is the classic one. For a week or more, an eSIM is usually cheaper and keeps you in control.
Check what your own carrier charges before the trip, not after.
If an eSIM is the cheaper call, Nomad covers Iceland.
Get your Nomad eSIM for Iceland→(opens in a new tab)we may earn a commissionMedical cover
The one cost with no price tag.
Every other number on this page has a price you can look up. This one does not, and it can be the largest of them all. Most US health plans cover little or nothing once you leave the country, and Medicare covers essentially none of it abroad. A serious illness or injury is paid up front, and a medical evacuation runs from tens of thousands of dollars to past $100,000 if you are remote or an ocean from home.
First, you may not need to buy anything.
A cheap, refundable trip close to home does not need this. And if you are healthy, headed somewhere with good care, and one of the premium cards on the shortlist above already includes emergency medical and evacuation, you may be covered already. Check your card's benefits guide before you buy. Saying that costs us the commission, and it is still the right call.
How much cover matters here
Here, good hospitals are easy to reach and the care is high quality, so for a healthy traveler this leans more toward your call than a must.
If you do want cover, this is what it is for: the evacuation and the up-front hospital bill, the part no card limit is meant to absorb.
Enough for most trips
Faye, or a comparable whole-trip policy
Bundles trip protection with emergency medical, which is enough cover for most travelers on a typical trip.
The deeper end
A dedicated travel-medical plan built for serious care and evacuation abroad
Stronger on medical care and evacuation, for a remote or higher-risk trip where that is the real exposure.
If it happens
Call it first, then call your insurer's 24/7 assistance line, which is what confirms payment and arranges an evacuation. 112 is Iceland's single emergency number, reaching police, ambulance, fire and search-and-rescue from any phone, even with no SIM or credit. Operators speak English. There is also a free 112 Iceland app that can send your GPS location to responders, worth having if you head into the backcountry.
TrueTripCosts explains the gap and points to options. It does not set your coverage amounts or act as your insurance advisor, and every policy carries its own exclusions, so read them before you buy. Emergency number checked Jul 2026. Confirm the current number before you travel, as local lines can change.
Renting a car
Where the rental desk makes its money.
Renting is often the best way to see Iceland, and the cover is where the counter earns its margin. The rental comes with basic collision cover, but it leaves you owing the excess, the first slice of any damage or theft bill, often several hundred to a couple of thousand dollars, held on your card until the car is back. The desk will offer to erase that excess. It is a real product, just priced at the counter for far more than the same cover costs if you arrange it before you go.
You may not need to buy anything at all. Some US credit cards include rental collision cover when you pay with the card and decline the counter's version, so check what your own card covers on rentals before you add anything extra. We cannot read your policy for you, and flagging this can cost us the sale below, but it is the honest first step.
If your card does not cover it, or you would rather have cover built for this, a standalone policy bought ahead is the cheaper way to handle it. It covers the damage and theft the rental leaves you liable for, often including parts the counter cover leaves out like tires, glass and the underbody, and mechanical faults stay the rental company's problem. RentalCover covers rentals in Iceland. Read what the policy includes before you buy.
Cover a rental in Iceland with RentalCover→(opens in a new tab)we may earn a commissionCurrency basics
The Icelandic krona, in plain terms.
Quick conversion
Iceland uses the krona (ISK). At about 126 krona to the dollar in mid-2026, 1,000 ISK is roughly 8 dollars, 5,000 ISK about 40, and 10,000 ISK about 79. Prices already include VAT, so the figure on the tag or menu is what you pay.
Notes and coins
Notes run 500, 1,000, 2,000, 5,000 and 10,000 kronur; coins are 1, 5, 10, 50 and 100 kronur. You will rarely handle any of it, since almost everything goes on a card.
It's kronur, not euros or dollars
Iceland is not in the EU or the eurozone, so the currency is the Icelandic krona. Euros and dollars are not accepted in normal shops, and there is no reason to carry them; your card handles everything.
Tipping is not expected
Service is included and there is no tipping culture. Rounding up or leaving a little for exceptional service is a kind gesture, never an obligation. See the tipping section below.
Real exchange rate
What your money is really worth here.
This is the mid-market rate, the one the banks trade at and the yardstick every other rate is measured against. Your card lands a little below it, and if a screen ever offers to bill you in dollars, that is worse again. So this is the number to expect, and how you spot a bad one.
1 US dollar is about 126 ISK
Taxes, refunds and the lodging tax
High prices with tax in them, money back on shopping, and a small nightly tax.
Iceland is expensive, and VAT is already in the price: 24% on most things, a reduced 11% on accommodation, food, books and some transport and culture, so the tag or menu figure is what you pay. The win worth acting on: as a non-resident you can reclaim the VAT on goods you buy to take home, on receipts of at least 12,000 ISK in a single store. Ask for a tax-free form at the till, keep the goods handy, and get it validated and refunded at the desk in the arrivals hall at Keflavik before you check your bags; after fees you get back roughly up to 14%. It covers goods only, not hotels, tours, restaurant meals, fuel or groceries, and you have three months to claim. Separately, a small nightly lodging tax is added to stays: about 800 ISK per hotel room a night (400 ISK for campsites), often not shown in the online price. And if you are renting a car, budget the new per-kilometre road tax (below), parking-app fees at popular sites, and the one toll tunnel near Akureyri (Vadlaheidargong), which is paid online by plate.
Before you book: passports, the six-month rule and whether you need a visa. Not a US citizen, or connecting through Europe? The rules can differ, and even a layover can need its own visa. See our passports and visas guide →
Watch out for
The small traps that catch first-timers.
Tipping
Not expected: service is included.
Tipping in Iceland is genuinely not a thing, so you can relax about it. Wages are decent and service is included, so there is no expectation to tip at restaurants, bars or cafes, and no card-terminal tip prompt culture as in North America. If service was exceptional, rounding up the bill or leaving a small amount is a warm gesture, never an obligation. Taxis are not tipped; just pay the fare. For a private guide or driver who makes your day, especially on a long tour, a tip is appreciated but still optional, and cash is easiest if you want to give one. In short, do not budget for tips here the way you would at home.
Common questions
Quick answers.
Do I need cash in Iceland?
Barely, if at all. Iceland is one of the most cashless countries anywhere: cards, tap and mobile wallets work almost everywhere, including fuel pumps, tours and remote guesthouses. Keep maybe 3,000 to 5,000 ISK as a just-in-case backup, but many visitors never spend it. Do not exchange a big pile of dollars into krona.
Should I pay in krona or dollars in Iceland?
Always krona. If a card terminal or ATM offers to charge you in US dollars, decline; that dynamic currency conversion adds roughly 3 to 8%. Choosing krona lets your own card handle the exchange at a fairer rate. Euros are not accepted in normal shops either, so do not bring them.
What is the best ATM to use in Iceland?
A bank ATM: Landsbankinn, Islandsbanki or Arion. They are common in Reykjavik and towns but thin in the countryside, so pull a little when you see one if you want cash. Read the on-screen fee, take a modest amount, and always decline the dollar conversion. Your own bank's foreign-ATM fee usually matters more than the machine's.
How much does the lodging tax cost in Iceland?
About 800 ISK per hotel room, per night (roughly 6 dollars), added on top of the room price; campsites are 400 ISK a night. It is charged per room, not per person, so it does not double for two people sharing. It rose from 600 ISK at the start of 2025 and is often left out of the online booking price, so it can appear at check-in or checkout.
Can I get a VAT refund on shopping in Iceland?
Yes, if you live outside Iceland. You can reclaim the VAT on goods you take home, on receipts of at least 12,000 ISK in a single store. Ask for a tax-free form at the till, then validate and collect at the refund desk in the arrivals hall at Keflavik before you check your bags. After fees you get back roughly up to 14%. It covers goods only, not hotels, tours, meals, fuel or groceries.
Why is Iceland so expensive, and how much should I budget?
High wages, remoteness and heavy import costs make almost everything pricey, from coffee to car hire. For everyday spending beyond your hotel, very roughly 15,000 to 25,000 ISK a day per person (about 120 to 200 dollars) is a realistic mid-range figure, mostly on card. The fix is to budget a higher daily number than elsewhere, and if you drive, add the new per-kilometre road tax and parking fees.
What it really costs
What you'll really spend in Iceland.
Your flights if you want them counted, your room, your on-the-ground spending, the two fees most US cards add without telling you, and Iceland's tourist tax. One number, nothing waiting on the statement. No bank to pick, no sign-up, nothing saved.
Optional. Enter your round trip fare per traveler to fold flights into the total.
In Iceland, plan for about $0.
Realistically somewhere between $0 and $0.
Whether at an ATM or a card terminal in a shop or restaurant, always choose to be charged in the local currency, not dollars. Paying in dollars (called dynamic currency conversion) lets the machine set its own, worse, exchange rate on top of any fee.
Rough guide, not a quote. The percentage here is a blended stand-in for a typical US card's foreign fee, not your exact rate. The real number moves with the card you carry: one no-foreign-fee card can cover both sides, while a plain rewards credit card only removes the fee on what you buy, and cash still costs a little unless that card also waives ATM and foreign-cash fees. A debit card, or accepting the "pay in dollars" (dynamic currency conversion) offer at a till or ATM, can push it higher. Rates checked Jun 2026 and rounded.
How this estimate is built
These are the assumptions behind the number. Change the room price, nights, travelers, or travel style above, and every line here moves with them.
- Hotel
- Daily spending
- Flights
- Cash vs card
- ATM withdrawals
- Foreign fee
- The range
- Tourist tax
Not sure which card to bring? See my pick for Iceland.
Already carry a card with no foreign transaction fee? Then you are set for Iceland, and can skip this. There is nothing to buy.
If you are getting a card for Iceland, this is the pairing I would pick: a no-foreign-fee credit card for spending, and a fee-free ATM debit card for cash. We earn nothing on these today. Always confirm the current fee with the issuer before you apply. Checked Jun 2026.
Capital One charges no foreign transaction fee on any of its cards.
No foreign transaction fee
Fee-free ATM cash worldwide
Want one account that holds and spends in the local currency? A different job from the three above, and the one I reach for abroad. It is free to open; you can create a virtual card in the app and add it to your phone wallet in minutes, without waiting for the physical card; and you can convert US dollars into the local currency inside the account before you travel, then spend from that balance. Wise uses the mid-market rate plus a small conversion fee (around 0.4% and up), with no flat foreign fee.
The three picks above pay us nothing, and their tags say so. Wise is the only option here that can earn us a commission, and its tag says that too. Paid or not, the pick is still the pick.
Travelers, not touristsA few words of Icelandic go a long way
A few words of Icelandic go a long way
Icelandic has barely changed in a thousand years, so Icelanders can still read the old sagas, and a friendly Takk and a story or two mark you as a guest rather than a tourist.
Say a few words
Tip: Iceland was settled by Norse and Celtic voyagers over a thousand years ago, and the medieval sagas that tell their story are still read today. The language has changed so little that many Icelanders can trace their family right back to the settlers. A warm Takk for thank you goes a long way.
Know a story
The world's oldest parliament
In the year 930, the chieftains of Iceland gathered on the plain at Thingvellir to make laws and settle disputes together, founding the Althing, the oldest parliament in the world still going. For two weeks each summer the whole island came to camp, trade and hear the law read aloud. It meets to this day in Reykjavik.
Good to know: the Althing dates from the year 930
A land settled by sea
The first settlers came to this remote island in open Viking ships, carrying their families, livestock and everything they owned across the cold North Atlantic. They landed on black volcanic sands beneath green cliffs and built a new nation from scratch. Their voyages and feuds became the sagas.
Good to know: the settlement began around the year 870
Stories that kept a nation warm
Through the long, dark winters, Icelanders gathered by the fire to tell the sagas, sweeping tales of settlers, feuds, love and adventure passed down for generations before they were ever written on calfskin. These medieval stories are Iceland's great gift to world literature. Many are still household names here.
Say it: the Icelandic sagasIcelanders are independent, literary and quietly proud of a tiny nation that has kept its language, its sagas and the world's oldest parliament alive on a wild volcanic island. They say more books are written and read here, per person, than almost anywhere. Show real interest in the sagas and you win a friend.
No links here, nothing to buy. This part is just to help you travel well.
Sources, and how this guide was checked
Last checkedJul 2026
Changed since last checkSources added on first publish, checked July 2026. Confirmed that Iceland (outside the EU, its own krona) charges VAT of 24% on most things and a reduced 11% on accommodation, food and books, all already in the price, and that non-residents can reclaim VAT on goods over 12,000 ISK in one store, worth up to about 14% after fees. The nightly lodging tax (gistinattaskattur) rose to 800 ISK per room at the start of 2025 (from 600 ISK), with 400 ISK for campsites. We also flag the per-kilometre road tax that started on 1 January 2026, which mostly affects rental-car drivers.
- Skatturinn (Iceland Revenue and Customs)the lodging tax, 800 ISK for hotels and 400 ISK for campsites per night
- Skatturinnthe VAT-free refund for visitors, the 12,000 ISK minimum and how to claim it at Keflavik
- Visit Reykjaviktax-free shopping, the 12,000 ISK minimum and the refund desk at the airport
- Blue Car Rentaldriving costs, tolls, parking fees and the 2026 per-kilometre road tax
Our own judgmentThe daily cash share, tipping norms, and likely ATM behavior are our own estimate from experience, not an official figure.
More money guides in Europe
If you are also weighing up nearby destinations, each guide covers cards, cash, ATMs and the fees to expect.
This is how Iceland stands today.
Money rules move. We can let you know for free if that changes.