Lease tax by state
How is a car lease taxed in Washington?
Tax is added to each monthly payment. The Washington state-level rate is 6.50%.
- Method
- Tax on each monthly payment
- State base rate
- 6.50% (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. Washington's state-level lease sales-tax rate is 6.50% (before any local add-on).
Your cap-cost reduction (cash down, trade equity, or rebates applied as a down payment) IS taxed in Washington, so putting more cash down does not escape the tax.
The detail
Washington taxes each monthly lease payment at the combined retail sales tax rate plus the 0.3% motor vehicle sales/lease tax (state base 6.5% + 0.3% = 6.8% before local). Cap-cost reduction / capitalized down payment is taxable. Quirk: the first 36 months of lease payments are exempt from the voter-approved local 'public safety' tax component; leases beyond 36 months pay the regular full rate thereafter. Short-term rentals are sourced to lessor location; longer leases sourced to lessee.
Local add-ons
Local sales taxes (0.5%-3.5%) PLUS a statewide 0.3% Motor Vehicle Sales/Lease Tax apply on each lease payment; combined rates commonly ~8.8%, up to ~10.6%. Sourced to lessee's location for longer leases.
See what this does to your true monthly cost
Washington'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 Washington) to fold the tax into one honest, comparable effective monthly figure.
Estimate my Washington lease cost →Source: dor.wa.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 Washington Department of Revenue before you sign.