How is tax determined on a lease?

If you are rolling taxes into your monthly payment, is the tax determined on the remaining payments on the lease before taxes are added to the monthly payments?

I got a dealer worksheet that assessed taxes on the remaining monthly payments which includes taxes. To me that is tax on tax which seems incorrect.

For example, if the pre tax monthly payment was $100/month and the post tax monthly payment was $150/month. They multiplied 24 months * $150/month plus the factory incentives multiplied by the tax rate to determine the tax. Seems wrong because they calculated the tax using a number that already had taxes included.

Do you also pay tax on Title, lelicense and registration fees if they are due at signing?

As I write this I think they did this wrong

What state are you in?

Usually you’re only paying tax on the “loaned” portion of the vehicle, which roughly translates to the payment+ state sales tax rate (on the payment).

So for me in Socal, if my base payment was $100, my payment after tax is $109.

In Illinois. They recently changed the law so I am paying tax on the remaining payments on the lease.

There were manufacturer incentives that I understand I must pay taxes on as well

What do you mean by “remaining payments”?

And post something about your laws so that people don’t have to guess what you’re talking about.

Max_g by looking at your other posts you often comment with petty criticism.

I find this forum very useful and have learned a lot here. Don’t ruin my first post on this site.

Remaining payments or total payments on the lease.

Tax in Illinois is on the leased portion of the vehicle not the full sales price of the car.

Lease tax varies by state. In CA the tax is on the monthly lease payment. In Texas the tax is on the full retail value of the car regardless of the lease payment or term. Not sure what the law is in Illinois but it doesn’t sound right to levy tax on a figure that already includes tax.