Figuring out state taxes

[Klayfish]

I'm shopping around trying to find the best leasing deal. Even though I'm in PA, I don't mind searching nationwide. Frankly, I'm reading through the posts people make here talking about deals they got and reaching out to those dealers. I found one on the west coast that gave me a decent price. $0 down and $278/month for an SV on a 24 month lease. I asked if that included taxes, etc...and was then told that with taxes it would be $355/month. Huh? Taxes are $77/month? That seems wrong to me. I tried finding the PA state tax code and I *think* it says tax on a car lease is 3% of the lease price. But what does that mean? The cap cost on the car? Is that supposed to be spread out over the lease term? How do taxes on leases work, and anyone with experience know what all taxes total should really be?

 

[cgaydos]

I'm shopping around trying to find the best leasing deal. Even though I'm in PA, I don't mind searching nationwide. Frankly, I'm reading through the posts people make here talking about deals they got and reaching out to those dealers. I found one on the west coast that gave me a decent price. $0 down and $278/month for an SV on a 24 month lease. I asked if that included taxes, etc...and was then told that with taxes it would be $355/month. Huh? Taxes are $77/month? That seems wrong to me. I tried finding the PA state tax code and I *think* it says tax on a car lease is 3% of the lease price. But what does that mean? The cap cost on the car? Is that supposed to be spread out over the lease term? How do taxes on leases work, and anyone with experience know what all taxes total should really be?

Every state is different regarding how sales taxes work on leases, and I don't know PA. But the total cost of sales tax for that lease is $1848 ($77/month times 24 months) and that might be reasonable. If you assume a 6% tax rate on the full value of the car that would mean a sales price of $30,800, which is in the ballpark *IF* PA taxes the full value of a leased car.

Just to be sure I'd ask them to scan and send you a copy of the draft lease contract. That would show how the taxes are calculated and - importantly - whether they are adding "dealer packs" or other stuff you don't want to bump up the price.

 

[Klayfish]

I did a bit more digging. This is what I found on PA's website...
"Motor Vehicle Lease Tax: The motor vehicle lease tax is imposed at 3 percent of the total lease price and applies to vehicle leases of 30 days or more."

I need to figure out if that means the cap cost of the car, or the monthly payment? If it's the cap cost of the car, at a $30k cap cost, that's $900. On a 24 month lease, that comes out to $37.50/month. But I'm not sure that's right either...I'm paying tax on the full price of a car that I'm never going to fully pay for. :?

**UPDATE**
I called the finance department of the local PA dealer. The tax is 9%...which is the normal 6% sales tax that PA has, plus the 3% lease tax. You pay that on the cap cost reduction. So if the cap cost on the car was $30k and the residual value at the end of the lease was $16k, I'd pay taxes on the $14k I "used" while leasing the car. That cost is spread out over the term of the lease. Ouch...9%, that's steep. But I suppose besides the 3% tacked on, it's not a ton different than purchasing. I'd pay 6% sales tax on the full price of the car if I bought it.