Despite historically high literacy rates, there has been declining reading proficiency amongst students in Iceland. This decline has caused concern and created a need to better understand foundational reading growth in the Icelandic school context. This study aimed to evaluate reading growth patterns in letter sound fluency, nonsense word fluency, sight word fluency, and oral reading fluency across 1st grade by initial at-risk status, gender, and age in months. The participants (N = 253) were a sample of 1st grade students, 107 boys and 146 girls, enrolled in four Icelandic public schools. Results indicated a widening gap across the year for children at risk of reading difficulty (d = 0.68-0.92) and a clear Matthew effect in foundational reading skills. Gender was not related to growth on any of the measures and age had a small but significant relation with the growth of nonsense word fluency across the year. The results indicate concerning trends for children at risk of reading difficulty in the Icelandic school context with implications that gaps will continue to widen in reading for these children across their academic careers unless targeted intervention is provided.