Lease initiated in Illinois and Moving to MD

suharsh

Hi

If I initiate a lease in Illinois .. where the current tax law is only the proportionate cost (it used to be on entire vehicle cost couple of years back) and then move to a state (for example sake Maryland) where the tax is on entire vehicle, how does it work? So let's say I lease a vehicle on March 1st in Illinois for $300/month lease and say taxes on that are $20/month and vehicle cost was $30k. Now if I move to MD in July and get the vehicle registered there, would my payments remain at $320 or would it now be taxed for the entire cost of the vehcile?

Hope I was able to explain this question well.

kyfdx

suharsh said:

Hi

If I initiate a lease in Illinois .. where the current tax law is only the proportionate cost (it used to be on entire vehicle cost couple of years back) and then move to a state (for example sake Maryland) where the tax is on entire vehicle, how does it work? So let's say I lease a vehicle on March 1st in Illinois for $300/month lease and say taxes on that are $20/month and vehicle cost was $30k. Now if I move to MD in July and get the vehicle registered there, would my payments remain at $320 or would it now be taxed for the entire cost of the vehcile?

Hope I was able to explain this question well.

Even though Illinois only taxes the payments, they collect that money upfront. So, in your example, the $720 was added to the CAP cost. From anyone else's perspective, your payments are not $300+tax, but just $320.

I only mention that, because if you were moving to a state that taxes the monthly payment (say, KY or CA), your payment would definitely go up, because no matter what tax you paid previously, they tax the payment and collect it monthly.

But, Maryland? I don't know. As you noted, they collect tax on the entire price of the leased vehicle. Would they charge you full tax for the car, as new, but credit you for the $720 you already paid? Or, would they tax it full price as a used car? I'm pretty sure if you moved there with a car that you already owned, and had paid the full sales tax on, in Illinois, you would just pay to transfer your title/registration. But, you didn't pay full tax on it..

A few other states charge on the full price (VA, TX, for example). Some states charge on the payments, but collect it upfront (NY, NJ, OH, IL, GA). Most of the other states charge tax on the monthly payment, and collect it monthly. As I noted above, your payment will definitely go up in those states that collect the tax monthly.