Lease tax by state
How is a car lease taxed in Illinois?
Tax is added to each monthly payment. The Illinois state-level rate is 6.25%.
- Method
- Tax on each monthly payment
- State base rate
- 6.25% (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. Illinois's state-level lease sales-tax rate is 6.25% (before any local add-on).
Your cap-cost reduction (cash down, trade equity, or rebates applied as a down payment) IS taxed in Illinois, so putting more cash down does not escape the tax.
The detail
Illinois changed its lease tax method effective January 1, 2015 (HB 2317). Before 2015, tax was due up front on the full selling price of the leased vehicle. Since 2015, tax applies only to amounts due at lease inception (down payment/cap-cost reduction) plus each monthly payment, like most states — cutting lease tax roughly in half. Note: under the 2015 change there is no trade-in credit on leases since the cap cost itself is no longer taxed. Method is tax-on-payments.
Local add-ons
Home-rule and local sales taxes add on (e.g., Chicago/Cook County combined can reach ~10%+); combined rates vary widely by jurisdiction.
See what this does to your true monthly cost
Illinois'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 Illinois) to fold the tax into one honest, comparable effective monthly figure.
Estimate my Illinois lease cost →Source: tax.illinois.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 Illinois Department of Revenue before you sign.