If I lease a car in Maryland, and then move to Massachusetts during the lease term, how does that work with tax payments?
wait until you move.
It makes no sense to pay 6.5% tax on the selling price in MD and then start paying monthly tax on top of those hideous payments after moving.
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Plus MA personal property tax
Do not lease in MD. I live in MD
You will pay 6.5% tax on the full price of the car in MD. Then when you move to MA you will pay MA tax on top of that, plus MA personal property tax as noted above. Unless you like being double (maybe even triple) taxed, wait until you move, then lease a car
Taking a step back Maryland, Virginia and Texas are the three states that tax leases based on total selling prices. So you pay all the tax up front (or roll it into payment) when you first lease the car. The taxes are then paid and fixed. Majority of states tax leases based on % of monthly payment. You pay every month and technically the tax rate could change during your lease.
The way it works is it just doesn’t make sense to go from VA/MD/TX to a state that taxes monthly. You end up getting taxed twice.
I saw something about reciprocity, but I am guessing that is a logistic nightmare?!
All states have reciprocity for taxes paid on a purchased vehicle if you move shortly after buying the car. Leasing is just more complicated. Maybe you could fight with the DMV and get credit for taxes paid eventually. That is a good question. But up front the Commonwealth is going to want you paying monthly taxes unless/until you get it resolved.
So what happens if I wrap up all my taxes in MD? Would I still pay the monthly fee in the lease agreement for MD and then get hit with MA taxes when I register the vehicle in MA without the MD wrapped taxes going away?
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