EDIT: I already have a lease on this car.
Just thought I would ask the experts. I moved from TX to CO and am getting reamed on my payment with added sales tax.
Is there anything to do about it? Will the buyout be any different in CO?
Just curious, and thanks!
-M
What is the car and why do you want to buy it?
I updated above, but this is for a lease I already have. We just moved from TX → CO.
I understand that you already have the car. I still have the same question.
Not sure I will buy it, doesn’t matter what car it is. I am asking how to pay less money to the govt.
You moved from an upfront tax state to one that taxes the monthly payment. I skimmed the relevant CO tax bulletins and the wording on everything is specific to whether or not tax was paid to Colorado, not if tax was paid at all.
My understanding - and I could very well be wrong - is that sometimes the state is the tax authority and sometimes the city/county is (e.g. it appears Denver is). Whomever is your tax authority that is levying that, it’s worth asking them if there’s an exemption for tax paid out of state, but it doesn’t read that way to me.
Good luck and let us know what you find. All past posts here related to CO ended with “you owe state sales tax on the payment”.
Thanks for looking, unfortunately this was my conclusion as well but I was hoping someone would see something I missed.
I didn’t look up the CO law, but generally, in most states, if you show proof tax was paid, they will not levy an extra tax on you, so long as you paid the same or more tax in the first place. Basically, you need your lease paperwork showing the amount of sales tax levied on the original lease, even if it was capitalized into the monthly, to even hope they’ll drop the extra sales tax from your payment.
So in this instance I am using HMF (Hyundia Motor Finance) - wouldn’t they know this and not add extra sales tax onto my payment?
No, the tax is assessed by Colorado. It is your responsibility to provide the proof of the tax already paid.
Would you suggest talking to my finance company or my CPA / state of colorado as a starting point? Thanks for your help.
EDIT: or maybe even my previous state?
As I mentioned, you will need to ask Colorado what proof they need (not sure if it’s at the DOR or the DMV, as it varies from state-to-state), but it’s probably your lease.
This works when it’s a neat equivalence, for example tax paid on a car you own (percentage of the purchase price paid in a lump sum) as a credit against the tax that would be owed when registering in a new state (again, percentage of the car’s purchase price or book value payable in a lump sum).
Doesn’t work when it’s square pegs in round holes (ie tax paid upfront as a credit against future taxes on future monthly payments). Or at least it didn’t for NY to WA
Like I said, it depends on the state. Most states will accept proof of tax paid and adjust. It’s OP’s job to call up and find out.
Choose an address in Colorado with lower sales tax. Depending on the address you register the car your tax is anywhere from 2.9% to 11.2%.
FYI, your taxing authority for vehicle registration is your county clerk. Denver and Broomfield are the only two consolidated city-county jurisdictions. In Colorado the DMV only handles driver licenses, not vehicle registration.
I’m not sure of your exact remedy but it might be to submit a form DR 0252 to request a Colorado credit for the taxes you paid in Texas.
See also:
Note that the Tax Topics states:
If a nonresident moves into Colorado and brings a
leased vehicle with them, changing the primary
property location for the vehicle to Colorado as a result
of the move, any lease payments made after the
change will be subject to Colorado state and state-
administered local sales taxes.
Check with your county clerk but I think HMF is obligated to collect those taxes, and it is up to you to file for a tax credit.
Technically Colorado is an upfront-tax state for leases of 36-months and less, unless the lessor has applied for and received permission to collect taxes per payment. But since most captive lendors have this permission effectively Colorado is a tax-per-payment state.
From dor_motorvehicledistribution@state.co.us:
No, there is not a credit for sales tax paid to Texas for a lease that originated there.
If a nonresident moves into Colorado and brings a leased vehicle with them, changing the primary property location for the vehicle to Colorado as a result of the move, any lease payments made after the change will be subject to Colorado state and state administered local sales taxes.
Question is are they correct? I asked my CPA as well…
As I’m sure you have already noticed, plenty of TX plates all over CO…you could just keep it under the TX plate for at least a little while longer if you so choose.
If only I could go back in time 
Yes, they are correct. You must pay sales tax on your lease payment in Colorado. Any amounts already paid in Texas in relation to the lease are irrelevant. Anybody telling you to apply for a credit is leading you astray and wasting your time. Every month you lease the car in Colorado is a separate transaction. For example, did you pay sales tax in Texas for the April 2025 rental of your car in Colorado? No, you didn’t. That transaction had not occurred yet when you were living in Texas.
Your CPA is not a sales tax expert, do not waste your money.
If you purchase the car at the end of the lease, you will pay Colorado sales tax on the buyout price. At buyout, you MIGHT be able to get a credit for the sales tax you paid on the Texas lease, but they will probably draw a distinction between taxes on a “lease” in Texas and taxes on a car “purchase” in Colorado. The transactions are not like for like and thus you probably won’t be successful there either.
You have no recourse with Texas. The amounts you paid to them were for the transaction(s) that occurred when you lived there. The initiation of your lease in Texas was a transaction that created a large tax burden for you in that state at that time. You can’t change the fact that the transaction occurred while you were in Texas.
The Colorado approach to lease taxation is actually quite fair and reasonable. Texas is the one who reamed you. Paying sales tax on the full amount of the car when a vehicle is leased in Texas is absolutely insane. But hopefully you enjoyed not having income tax in Texas. That was your trade-off.
I get to ask the CPA questions, so it’s a wash…
The only reason I got the lease was to do a buyout at the time but circumstances merited holding off doing that. All the nuances of leasing are bit complex (hence this site and others) so add to that our move to Colorado so I thought I would ask here.
Given “google” didn’t give any answers I did not / do not have high hopes for any monies being recovered.
-M