How is sales tax calculated on a car lease in New Jersey?

Tax is assessed once at signing on the sum of every scheduled payment plus your down payment, rather than being added to each monthly bill. The rate is 6.625%.

Do you pay lease tax up front in New Jersey?

Yes. New Jersey collects the tax at lease signing rather than spreading it across the monthly payments, which raises the amount due at signing.

Are manufacturer rebates taxed on a lease in New Jersey?

Yes. New Jersey includes manufacturer rebates applied as a capitalized cost reduction in the taxable base.

New Jersey Car Lease Tax — how it's calculated, with a worked example

Rate

6.625%

statewide

Paid

At signing

in one sum

Cost rank

7 of 10

cheapest first

How New Jersey calculates it

For an original term over 6 months, tax is due on an accelerated basis at lease inception on the total of the periodic payments (N.J.S.A. 54:32B-7(d)). The base includes acquisition fees and capitalized cost reduction payments such as cash down and manufacturer rebates; it excludes capitalized sales taxes, payoff of a prior loan on a trade-in, prior lease buy-outs, and state title and registration fees.

Source: New Jersey primary guidance · reviewed 2026-08-23

Still unresolved. New Jersey credits a trade-in allowance against the tax base while also counting it as a cap cost reduction; modeled here as a net reduction, which may understate tax on trade-in deals. Everything above is sourced; this specific point is not, and is flagged rather than guessed at.

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.

Adjusted capitalized cost$40,395.00

Residual value$27,000.00

Monthly depreciation$372.08

Monthly rent charge$124.68

Payment before tax$496.76

Monthly payment$496.76

Tax collected at signing$1,317.28

Due at signing$3,814.05

Total tax over the lease$1,317.28

True cost per month$588.91

Run your own numbers for New Jersey →

What's in the taxable base

Manufacturer rebatesTaxed

Trade-inReduces the base via lower payments

Cash down paymentIncluded in the base

Local surtaxNone

New Jersey against the other states

State	Due at signing	Total tax	True cost/mo
New York	$3,292.10	$795.34	$574.41
Florida	$2,526.57	$1,073.01	$582.13
Georgia	$3,574.41	$1,077.65	$582.25
Ohio	$3,640.07	$1,143.30	$584.08
Illinois	$3,739.48	$1,242.72	$586.84
Washington	$2,531.54	$1,251.85	$587.09
New Jersey	$3,814.05	$1,317.28	$588.91
California	$2,677.78	$1,441.55	$592.36
Pennsylvania	$2,541.47	$1,609.52	$597.03
Texas	$5,090.51	$2,593.75	$624.37