It’s somewhat ironic – the greater the number of people who, like us, fall in love with Iceland’s frozen waterfalls and blazing volcanoes, the more the country wants to charge them for it. Yes, Iceland intends to raise its visitor tax, and honestly, once you put two and two together, it is easy to see why.
Before we get into the numbers, here is the interesting aspect: despite volcanic eruptions, temperamental weather, and the small detail that everything there is ridiculously expensive, Iceland is more popular than ever. In the first nine months of 2025, there were just under 1.8 million visitors. This was up from 1.74 million in 2024 and significantly higher than 1.59 million in 2019.
And it gets wilder: hotels and B&Bs have had full occupancy since early 2025, and tourism revenues reached all-time highs. Even a volcano couldn’t keep a traveler away.
So, what’s the government’s solution? Penalize the traveling public with a few extra adds.
Since January 1, 2024, Iceland has already been collecting what they term an “accommodation tax.” This adds ISK 600 (roughly €4) per hotel room; half of that for campsites or camper vans, and cruise passengers pay a port tax of ISK 1,000 (per incident).
If you think that’s just a drop in the bucket, you’re not wrong — and, the Icelandic Tourism Board has a similar response indicating it doesn’t amount to a government bonanza. According to Jóhann Viðar Ívarsson, an analyst at Ferðamálastofa (the Icelandic Tourist Board), the tax money goes into the usual state budget, not into protecting nature or managing the impacts of tourism.
But still, the government wants to quickly increase the tax again. The plan is to help make tourism sustainable — or, as some skeptics might say, let visitors “pay for the view.”
But, let’s back up for a second — why is there suddenly a flood of tourists to the tiny Nordic island? Two words, Northern Lights and midnight sun. Add in natural geothermal springs, and soul-stopping glaciers, and waterfalls that look like they fell right out of a fairy tale, and you’ve got the makings of Instagram magic. Iceland is the perfect “fire and ice” postcard — no wonder people are besotted.
That said, however magical it is, there is a catch. Over-tourism is beginning to take a toll on Iceland’s fragile ecosystems. Hiking trails are deteriorating, the small towns can no longer handle the volumes of tourism, etc. Even the carbon footprint from all those flights is non-trivial.
This idea for a tax makes sense in this context. Sure, it’s a tax and it would help fill the government coffers, but it is much more about incentivizing the tourism, while potentially taking some of the burden off the environment.
If the new tax proposal passes (and it probably will in the coming weeks), form of Iceland may become a little more expensive to visit- but perhaps this is the price for maintaining it in it’s natural form.
So, the next time you’re in the Blue Lagoon or chasing the aurora, just remember: the ISK 600 may be used to support Iceland, well- an opportun to keep Iceland as Iceland.
