How is a car lease taxed in Utah?

What this means for your lease

In plain English: tax is added to each monthly payment. Utah's state-level lease tax rate is 4.85% (before any local add-on).

Your cap-cost reduction (cash down or rebates applied as a down payment) IS taxed in Utah, so putting more cash down does not escape the tax. Positive equity from a qualifying trade-in is not taxed.

The detail

Utah taxes a vehicle lease on each periodic payment at the combined sales tax rate (4.85% state plus local taxes). The part of any up-front payment that is part of the lease price, such as a cash down payment, is also taxable; amounts for nontaxable charges such as license, registration and titling fees are not (Utah Pub 5). Trade-in credit for an owned vehicle is allowed against a typical lease when the trade equity reduces the periodic lease payments (Utah Pub 5); a leased vehicle must be bought, with tax paid, before it can be traded in. Lease payments, including the down payment and first payment, are sourced to the lessee's address (Utah Pub 25).

Local add-ons

Local option, county option, transit, highway and other local sales taxes add to the 4.85% state rate on each lease payment, and a Supplemental State Sales and Use Tax (Utah Code 59-12 Part 20) also applies in certain locations. On the Utah State Tax Commission's rate chart effective October 1, 2026, combined rates start at 6.35% and vary by location.