Lease tax by state
How is a car lease taxed in Colorado?
Tax is added to each monthly payment. The Colorado state-level rate is 2.90%.
- Method
- Tax on each monthly payment
- State base rate
- 2.90% (excludes local add-ons)
- Down payment taxed?
- Yes — cap-cost reduction is taxed
- As of
- 2026-06-20
What this means for your lease
In plain English: tax is added to each monthly payment. Colorado's state-level lease sales-tax rate is 2.90% (before any local add-on).
Your cap-cost reduction (cash down, trade equity, or rebates applied as a down payment) IS taxed in Colorado, so putting more cash down does not escape the tax.
The detail
Default method: lessor (with Colorado DOR permission) collects sales tax on each lease payment for leases of 36 months or less. Sales tax also applies to the entire initial payment at signing (cap-cost reduction/down payment, first payment, etc.); trade-in fair market value is excluded. If lessor does NOT elect to tax payments, tax is due at registration on the lessor's cost less residual (a cap-cost-based calculation). So payment-based taxation is the prevailing consumer method but an upfront-at-registration alternative exists.
Local add-ons
Extensive home-rule city, county, and special district taxes add on; combined rates commonly 5%-11%+. Colorado has many self-collecting home-rule jurisdictions.
See what this does to your true monthly cost
Colorado's tax method changes the real cost of a lease — sometimes more than the headline payment does. Drop your numbers into the calculator (we preselect Colorado) to fold the tax into one honest, comparable effective monthly figure.
Estimate my Colorado lease cost →Source: tax.colorado.gov · High confidence · Reviewed 2026-06-20. Tax method is researched and cited per state; rates are state-level and exclude local add-ons. This is an estimate — verify with your dealer or the Colorado Department of Revenue before you sign.