Minnesota car lease tax

How Minnesota calculates it

Minn. Stat. 297A.815; DOR guide "Motor Vehicle Leases": "Sales tax on motor vehicle leases is collected on the total up-front lease price" at the 6.875% general rate "and any applicable local sales taxes." Total lease price = vehicle selling price - rebates - residual value - trade-in allowance + taxable add-ons + interest/finance charges, which equals the sum of the base payments plus any cash down. "Any rebate, regardless of origin, is deducted from the vehicle value", so rebates are NOT taxed (unlike New York). Trade-in reduces the vehicle value and therefore the payments; it is not credited a second time. A cash down payment does not reduce the vehicle value and is taxed as part of the total. Leases of 28 days or less are rentals under different rules. Local rates: the 0.75% metro-area transit tax and county taxes apply where the vehicle is garaged; not included in the 6.875% base rate.

Source: Minnesota primary guidance · reviewed 2026-09-25

Worked example

A $45,000 vehicle negotiated to $41,500, leased for 36 months at 60% residual and a 0.00185 money factor, with $2,000 down and a $895 acquisition fee.

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What's in the taxable base

Minnesota against the other states