How are Taxes on Car Lease Payments Calculated?

Taxes on monthly car lease payments are calculated on the base monthly payment or the base rent. The base monthly payment includes the depreciation charge and the finance charge. Together, the depreciation charge and the finance charge make up the base monthly payment which is paid to the lessor or leasing company every month until the maturity date of the lease (end of the lease term). Put more simply, the base monthly payment is the portion of the monthly car lease payment that includes all charges except the sales tax.

The sales tax that is added on to your base monthly payment can vary by city, county, or state. The total monthly car lease payment is calculated by multiplying the base monthly payment by the sales tax rate for the city or county in which the car is driven and then adding this product to the base monthly payment. For example, if the base monthly payment on a car is $200.00 and the sales tax rate is 8.75%, the total monthly car lease payment would be $217.50.

$200.00  x  .0875 = $17.50

$17.50 + $200.00 = $217.50

The total monthly payment would be $217.50.


Tags: , , , , , ,

Comments are closed.