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Sales Tax on Leases

Most states tax automotive leases by charging sales tax on the monthly payment. However, there are a few states, such as Illinois, that requires sales tax to be paid on the full purchase price of the car at the inception of the lease. Check with a local tax collector’s office to find out how your state taxes automotive leases.

Some areas have “local option” surtax in addition to the state sales tax base rate. This surtax should not affect the lease payment, but it enters the picture when the loan payment is calculated.

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