Car Lease Taxes and Fees in Massachusetts
As of September 2021, the following information is accurate. However, please note that tax rates and fees can change, so it’s always a good idea to check the most current rates on the Massachusetts state government website or consult with a tax professional.
Sales Tax
In Massachusetts, the sales tax rate is 6.25%. When leasing a car, you’re required to pay sales tax on the monthly lease payments, not the vehicle’s total value. The tax is typically included in your monthly lease payment.
Title and Registration Fees
– **Title Fee**: The fee to title a vehicle in Massachusetts is $75 as of 2021.
– **Registration Fee**: Registration fees can vary based on the type of vehicle and its use. For a typical passenger vehicle, the registration fee was $60 for two years.
Lease Acquisition Fee
Lease acquisition fees, also known as bank fees or administrative fees, are charged by the leasing company. This fee can range widely, from $300 to $900, depending on the leasing company.
Documentation Fee
Dealerships may charge a documentation fee for processing the paperwork involved in a lease. In Massachusetts, as of 2021, the documentation fee is capped at $400.
Insurance
Massachusetts requires drivers to have auto insurance, which includes bodily injury and property damage liability coverage. The cost of insurance can vary widely based on various factors, including the driver’s history, the vehicle type, and the coverage level chosen.
Security Deposit
Leasing companies may require a security deposit, especially if you are a first-time lessee or have a lower credit score. The security deposit can often be equivalent to one monthly payment.
Disposition Fee
At the end of the lease, you may be charged a disposition fee, which covers the cost of preparing the vehicle for resale. This fee can range from $300 to $400.
Excess Wear and Tear
If the vehicle has damage beyond “normal wear and tear,” you may be charged additional fees when you return it at the end of the lease.
Mileage Charges
Lease agreements include a mileage limit, and driving over that limit will result in additional charges, typically per mile over the agreed amount.
Property Tax
In some states, you have to pay personal property tax on leased vehicles, but Massachusetts generally does not tax tangible personal property.
Additional Fees
Depending on your specific lease agreement and situation, there may be additional fees and taxes. Always read your lease agreement thoroughly and ask questions about any charges you do not understand.
Remember to always check the most recent and local sources or consult a professional for the most accurate and up-to-date information, as tax rates and fees can change.