Lease tax by state
How is a car lease taxed in Vermont?
Tax on the total of all payments is collected up front. The Vermont state-level rate is 6.00%.
- Method
- Up-front tax on the total of all payments
- State base rate
- 6.00% (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 on the total of all payments is collected up front. Vermont's state-level lease sales-tax rate is 6.00% (before any local add-on).
Your cap-cost reduction (cash down, trade equity, or rebates applied as a down payment) IS taxed in Vermont, so putting more cash down does not escape the tax.
The detail
Vermont imposes a 6% Motor Vehicle Purchase and Use Tax (32 V.S.A. ch. 219), not general sales tax. For a lease, the taxable 'purchase price' is computed as Original Acquisition Cost minus Lease End (residual) Value — essentially the depreciation/total-of-payments base — and the 6% is assessed at registration. The cap-cost-reduction/down payment is effectively captured because the base is acquisition cost minus residual. Some lease-tax guides list VT under 'taxes monthly payments' (lessee passthrough view), but the statutory mechanic is an upfront 6% on the computed lease cost. If the lessee buys the car at lease end, 6% is owed on the residual/lease-end value. Tax also applies to excess wear/mileage charges at lease end.
Local add-ons
None on the motor vehicle Purchase & Use Tax — it is a flat 6% statewide; Vermont's separate 1% local option sales tax does not apply to the motor-vehicle Purchase & Use Tax.
See what this does to your true monthly cost
Vermont'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 Vermont) to fold the tax into one honest, comparable effective monthly figure.
Estimate my Vermont lease cost →Source: dmv.vermont.gov · Medium 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 Vermont Department of Revenue before you sign.