Lease tax by state
How is a car lease taxed in Indiana?
Tax is added to each monthly payment. The Indiana state-level rate is 7.00%.
- Method
- Tax on each monthly payment
- State base rate
- 7.00% (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. Indiana's state-level lease sales-tax rate is 7.00% (before any local add-on).
Your cap-cost reduction (cash down, trade equity, or rebates applied as a down payment) IS taxed in Indiana, so putting more cash down does not escape the tax.
The detail
Tax (7%) is collected on each monthly lease payment by the lessor. Taxable cap-cost reduction items (cash down, manufacturer rebates, first month payment, non-owner trade equity) are taxed up front. Net equity of an owner trade-in titled to the lessee is NOT taxed. See DOR Sales Tax Information Bulletin #28L.
Local add-ons
None — Indiana has no local sales taxes; 7% statewide rate applies uniformly.
See what this does to your true monthly cost
Indiana'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 Indiana) to fold the tax into one honest, comparable effective monthly figure.
Estimate my Indiana lease cost →Source: in.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 Indiana Department of Revenue before you sign.