1. How to Enter Your Lease Tax Rate
Most states charge a State Base Lease Rate plus a Local (County/City/Transit) Rate based on the Registration ZIP Code where your vehicle will be garaged. Click your state’s official lookup link below to find your combined state + local percentage (e.g., enter 8.30 for 8.30%) and enter it into the Tax Rate (%) field on the Lease Audit form.
2. The 3 Ways States Tax a Car Lease
- Monthly Payment Tax (Most States): Tax is applied monthly to your Pre-Tax Base Payment, plus upfront tax on any taxable Capitalized Cost Reduction (cash down or rebates).
- Upfront on Total Payments (GA, IA, IL, MN, NJ, NY, OH): Tax is calculated on the sum of all lease payments (or depreciation) and is due 100% upfront at signing.
- Upfront on Full Vehicle Price (MD, OK, OR, SC, TX, VA): Tax is charged on 100% of the full vehicle selling price at signing, just like a purchase.
3. Lease Trade-In Tax Credit Rules
- Must Be an Owned/Financed Trade-In: Trading in an existing leased vehicle receives zero tax credit in every state because the leasing bank owns the title.
- Full Trade Value (9 States): CT, DE, IL, MD, MN, NJ, TX, VT, and WI credit your full trade-in value even if you have a loan payoff.
- Net Equity Only (Most Monthly States): Only positive net equity (
Trade Value minus Payoff) applied as a Cap Cost Reduction reduces your taxable payment and is exempt from upfront CCR tax.
| State | State Base Lease Rate | Local Add-On Tax & Official Lookup | How Lease Tax is Charged | Lease Trade-In Credit Rule |
|---|---|---|---|---|
| Alabama | 1.50%State Auto Rental Tax | Yes — Plus county/city automotive rental tax: Alabama DOR Local Tax Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Alaska | 0.00%No State Lease Tax | Yes — Check municipal/borough lease tax rules: Alaska Local Tax Directory ↗ |
No State TaxLocal municipal rules vary | N/A (0% State Tax)No state lease tax applies |
| Arizona | 5.60%State TPT Base | Yes — Plus county & city TPT rate: Arizona DOR Tax Rate Map ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity lowers payment & is exempt from CCR tax |
| Arkansas | 8.00%6.5% State + 1.5% Long-Term Lease Tax | Yes — Plus local city/county sales tax: Arkansas DFA Tax Lookup ↗ |
Monthly PaymentPlus upfront tax on CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| California | 7.25%Statewide Base Rate | Yes — Plus county/district use tax (7.25%–10.75% total by garaging ZIP): California CDTFA Rate Lookup ↗ |
Monthly PaymentPlus upfront tax on ALL CCR (including trade equity) | No CreditCA taxes trade-in equity upfront as a Cap Cost Reduction |
| Colorado | 2.90%State Sales/Use Base | Yes — Plus city, county & RTD/CD district tax: Colorado DOR Sales Tax Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from CCR tax & lowers payment |
| Connecticut | 6.35%7.75% if vehicle price exceeds $50,000 | No Local Add-On (Annual town property tax billed separately): Connecticut DRS Vehicle Tax Info ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Full Trade-In ValueOwned trade-in value reduces taxable lease base |
| Delaware | 5.25% Upfront + 1.9914% MonthlyDMV Doc Fee + Lease Use Tax | No Local Add-On: Delaware DMV Fee Calculator ↗ |
Hybrid: Upfront + Monthly5.25% on vehicle price + 1.9914% on monthly payment | Full Trade-In ValueDE-titled trade reduces the 5.25% upfront fee base |
| District of Columbia | 6.00% – 10.25%Tiered by weight & MPG | No Local Add-On: DC DMV Excise & Tax Rates ↗ |
Monthly PaymentTaxed monthly over lease term | No CreditZero trade-in credit on leases or purchases |
| Florida | 6.00%State Sales Tax | Yes — Plus county surtax (0.5%–1.5%; $5,000 purchase cap does not apply to leases): Florida County Surtax List ↗ |
Monthly PaymentFull state + county rate on every payment | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Georgia | 7.00%Statewide TAVT | No Local Add-On (7.0% TAVT covers state & local): Georgia DOR TAVT Calculator ↗ |
Upfront on Lease Depreciation7% of ((Adj. Cap minus Residual) + CCR) | Net Equity OnlyOwned trade equity reduces TAVT depreciation base |
| Hawaii | 4.00%General Excise Tax (GET) | Yes — Plus 0.5% county surcharge (4.50% max; dealers pass through up to 4.712%): Hawaii DOTAX GET Rates ↗ |
Monthly PaymentPlus upfront tax on ALL CCR | No CreditZero trade-in credit in Hawaii |
| Idaho | 6.00%State Sales Tax | No Local Add-On (for motor vehicle leases): Idaho State Tax Commission ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from CCR tax & lowers payment |
| Illinois | 6.25%State Base Rate | Yes — Plus county/city/RTA tax (City of Chicago adds 15% Personal Property Lease Tax): Illinois MyTax Rate Finder ↗ |
Upfront on Total of PaymentsDue at signing or rolled into Cap Cost | Full Trade-In ValueOwned trade value directly reduces total taxable payments |
| Indiana | 7.00%Statewide Sales Tax | No Local Add-On (Plus annual county excise tax on registration): Indiana DOR Sales Tax Info ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyLike-kind owned trade equity is exempt from CCR tax |
| Iowa | 5.00%Fee for New Registration | No Local Add-On: Iowa DOT Lease Registration Info ↗ |
Upfront on Total of Payments5% of sum of monthly payments + upfront CCR | Net Equity OnlyOwned trade equity reduces total taxable lease price |
| Kansas | 6.50%State Base Rate | Yes — Plus city & county local sales tax: Kansas DOR Local Rate Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Kentucky | 6.00%Motor Vehicle Usage Tax | No Local Add-On: Kentucky DOR Usage Tax Info ↗ |
Monthly PaymentUnder lessor U-Drive-It gross receipts program | No CreditTrade-ins do not reduce monthly U-Drive-It usage tax |
| Louisiana | 5.00%State Sales/Lease Rate | Yes — Plus parish/local lease & rental tax (4.0%–7.0% local): Louisiana Parish Tax Lookup ↗ |
Monthly PaymentPlus upfront tax on CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Maine | 5.50%State Sales Tax | No Local Add-On (Plus annual municipal excise tax at registration): Maine Revenue Services ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Maryland | 6.00%6.50% on certain vehicles over $30,000 | No Local Add-On: Maryland MVA Excise Tax Info ↗ |
Upfront on Full Vehicle Price100% of vehicle price taxed at signing | Full Trade-In ValueOwned trade value reduces full vehicle price before tax |
| Massachusetts | 6.25%Statewide Sales Tax | No Local Add-On (Plus annual local motor vehicle excise tax): Massachusetts DOR Vehicle Tax ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Michigan | 6.00%Statewide Use Tax | No Local Add-On: Michigan Treasury Sales & Use Tax ↗ |
Monthly PaymentPlus upfront tax on ALL CCR | No Credit on LeasesMI’s purchase trade-in credit does not exempt lease CCR |
| Minnesota | 6.875%Motor Vehicle Lease Sales Tax | No Local Add-On (6.875% statewide rate applies to leases): Minnesota DVS Tax & Fees ↗ |
Upfront on Total Lease ValueTaxed on (Price + Fees minus Residual) + Interest | Full Trade-In ValueOwned trade value directly reduces upfront taxable base |
| Mississippi | 5.00%Motor Vehicle Lease Rate | No Local Add-On (for standard long-term consumer auto leases): Mississippi DOR Vehicle Tax ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Missouri | 4.225%State Base Rate | Yes — Plus county & city local tax: Missouri DOR Sales Tax Map ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Montana | 0.00%No Sales/Lease Tax | No Local Add-On: Montana DOJ Vehicle Registration ↗ |
No Sales/Lease Tax0% state and local tax | N/A (0% Tax)No lease tax applies |
| Nebraska | 5.50%State Base Rate | Yes — Plus city/county local sales tax (0.5%–2.0%): Nebraska DOR Rate Finder ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Nevada | 6.85%State Base Rate | Yes — Plus county local rate (8.375% in Clark County / Las Vegas): Nevada Taxation Rate Info ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| New Hampshire | 0.00%No Sales/Lease Tax | No Local Add-On (Town registration permit fees apply): New Hampshire DMV Registration ↗ |
No Sales/Lease Tax0% state and local tax | N/A (0% Tax)No lease tax applies |
| New Jersey | 6.625%+0.4% Luxury Fee if over $45,000 | No Local Add-On: NJ Motor Vehicle Lease Tax Guide ↗ |
Upfront on Total of PaymentsOr total lease depreciation method | Full Trade-In ValueOwned trade value reduces taxable lease base before tax |
| New Mexico | 4.00%Motor Vehicle Excise / Lease GRT | Yes — Monthly payments are subject to local Gross Receipts Tax (GRT): New Mexico GRT Location Map ↗ |
Monthly PaymentPlus upfront tax on CCR | Net Equity OnlyOwned trade equity reduces taxable base |
| New York | 4.00%State Base Rate | Yes — Plus county/MCTD local tax (typically 8.00%–8.875% combined): New York DTF Jurisdiction Lookup ↗ |
Upfront on Sum of PaymentsTotal payments + upfront CCR taxed at signing | Net Equity OnlyOwned trade equity is exempt from NY upfront lease tax |
| North Carolina | 3.00%Highway Use Tax (HUT) | No Local Add-On (Annual county property tax billed separately): NCDOT Highway Use Tax Info ↗ |
Monthly Payment3% on monthly payment + 3% on cash/rebate CCR | Net Equity OnlyOwned trade equity reduces cap cost & monthly payment |
| North Dakota | 5.00%Motor Vehicle Excise Tax | No Local Add-On (for motor vehicles): ND Motor Vehicle Excise Tax ↗ |
Upfront on Lease ConsiderationTotal lease consideration taxed at inception | Net Equity OnlyOwned trade allowance reduces taxable lease value |
| Ohio | 5.75%State Base Rate | Yes — Plus county & transit authority tax (6.50%–8.00% total): Ohio Finder Tax Rate Lookup ↗ |
Upfront on Total of Payments100% of total lease tax due at signing or capitalized | Net Equity Only (New Cars)On NEW vehicles only, owned trade equity is exempt from CCR tax |
| Oklahoma | 4.50%3.25% Excise + 1.25% Sales (Leases 24+ mo) | No Local Add-On (on state motor vehicle excise/sales tax): Service Oklahoma Vehicle Taxes ↗ |
Upfront on Full Vehicle PriceTaxed at signing just like a purchase | Partial Credit (1.25% Only)Trade value reduces the 1.25% sales tax, not the 3.25% excise tax |
| Oregon | 0.50%Vehicle Privilege Tax (New Vehicles) | No Local Add-On: Oregon Vehicle Privilege Tax ↗ |
Upfront on Vehicle Price0.50% on new vehicles with 7,500 miles or less | No CreditTrade-ins do not reduce Oregon’s 0.50% privilege tax |
| Pennsylvania | 9.00%6% Sales Tax + 3% Motor Vehicle Lease Tax | Yes — 10.00% in Allegheny County (Pittsburgh); 11.00% in Philadelphia: Pennsylvania DOR Tax Info ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from CCR tax & lowers payment |
| Rhode Island | 7.00%Statewide Sales Tax | No Local Add-On: Rhode Island Division of Taxation ↗ |
Monthly PaymentPlus upfront tax on cash CCR | Net Equity OnlyOwned trade equity & factory rebates are exempt from CCR tax |
| South Carolina | 5.00% ($500 Max)Infrastructure Maintenance Fee (IMF) | No Local Add-On: South Carolina DMV IMF Fees ↗ |
Upfront Flat Cap ($500 Max)5% of price capped at $500 at signing | Capped at $500Any net price of $10,000+ hits the $500 flat maximum cap |
| South Dakota | 4.00%Motor Vehicle Excise Tax | No Local Add-On: South Dakota DOR Excise Tax ↗ |
Monthly PaymentAssessed on monthly lease payments (leases over 28 days) | Net Equity OnlyOwned trade equity lowers monthly base payment |
| Tennessee | 7.00%State Base Rate | Yes — Plus local county/city rate (single-article cap applies to upfront CCR): Tennessee DOR Local Tax Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Texas | 6.25%Statewide Motor Vehicle Tax | No Local Add-On: Texas Comptroller Vehicle Tax ↗ |
Upfront on Full Vehicle Price100% of Selling Price taxed at signing | Full Trade-In ValueOwned trade value & rebates directly reduce full vehicle price |
| Utah | 4.85%State Base Rate | Yes — Plus local county/city rate: Utah State Tax Rate Charts ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Vermont | 6.00%Purchase & Use Tax | No Local Add-On: Vermont DMV Lease Tax Calculator ↗ |
Upfront on Lease Depreciation6% of (Selling Price + Doc Fee minus Residual) | Full Trade-In ValueOwned trade value reduces taxable price before subtracting residual |
| Virginia | 4.15%Motor Vehicle Sales & Use Tax ($75 min) | No Local Add-On (Plus annual local personal property car tax): Virginia DMV Sales & Use Tax ↗ |
Upfront on Full Vehicle Price100% of Selling Price net of rebates taxed at signing | No CreditZero trade-in credit in Virginia; taxed on full price |
| Washington | 6.80%6.5% State + 0.3% Motor Vehicle Tax | Yes — Plus local transit/RTA rate (typically 9.0%–10.6% total; select “Motor Vehicle Sales/Rentals”): Washington DOR Tax Rate Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| West Virginia | 6.00%Motor Vehicle Privilege/Lease Tax | No Local Add-On: West Virginia DMV Title & Tax Info ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |
| Wisconsin | 5.00%State Base Rate | Yes — Plus county/city local tax (0.5% in most counties; higher in Milwaukee): Wisconsin DOR Rate Lookup ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Full Trade-In ValueOwned trade value reduces taxable lease payments |
| Wyoming | 4.00%State Base Rate | Yes — Plus county local option tax (1.0%–2.0%): Wyoming DOR Tax Rate Charts ↗ |
Monthly PaymentPlus upfront tax on cash/rebate CCR | Net Equity OnlyOwned trade equity is exempt from upfront CCR tax |