If you are planning on leasing a car in Georgia, read this article and save at least $800 to $3,000 on your next lease.
Before the Change
If you were going to lease a car worth $30,000, the sales tax would have been $2,100 (7% tax rate). The $2,100 would have either been built into your lease or you would have paid it up front.
How fair is this?
- You do not own the car.
- You are only using approximately 50% of it in most cases.
- You have to give it back in 3 years.
- You may face additional penalties for mileage overage and damages, if applicable.
After January 1, 2018
Beginning January 1, 2018, car leasing in Georgia has become much more favorable to the lessee/buyer.
Instead of paying sales tax on the full price of the vehicle, now you will only pay sales tax on the portion of the car that you lease.
Example using a $30,000 car:
- Previous sales tax liability: $2,100
- New sales tax liability: $1,050
That is a difference of at least $29.17 per month (the savings could be higher depending on your interest rate).
Is This a Deal?
Yes and no.
Basically, you are simply no longer being taken advantage of by the government.
Summary of Key Benefits
- Sales tax now applies only to the leased portion of the vehicle.
- Significant savings of hundreds or thousands of dollars.
- Monthly lease payments will generally be lower.
- Fairer taxation system aligned with actual use of the vehicle.
Frequently Asked Questions
Why did Georgia change the way it taxes car leases?
Starting January 1, 2018, Georgia revised its car lease taxation system to make it fairer. Instead of taxing the full value of the vehicle, the sales tax now applies only to the portion of the vehicle that is actually leased.
How much money can I save under the new Georgia lease tax rules?
You can potentially save between $800 and $3,000 over the lease term, depending on the car’s value, lease terms, and applicable interest rates.
Does the new tax rule apply to all leased cars in Georgia?
Yes, the revised taxation applies to all new leases initiated in Georgia on or after January 1, 2018. Leases initiated before this date are still taxed under the old rules.
Will my monthly lease payments be lower with the new tax rule?
Generally, yes. Because the sales tax is now calculated only on the leased portion of the car, your overall monthly payments should be lower compared to the previous tax structure.
Is leasing now a better deal than buying in Georgia?
Leasing has become more financially attractive due to lower taxes, but whether it’s a better deal depends on your individual driving habits, financial goals, and how long you plan to keep the car.