Vehicle Taxability - Leasing & Dealers

Helpful Resources

Leasing and Auto Dealer Transactions

When buying a vehicle from an auto dealer, there are many options available to the consumer.  Here we will provide information on how the sales tax applies to the different transactions that may occur.

 

Leases

A lease is any transfer of the possession or control of tangible personal property for a fixed or indefinite term, for consideration. Leases include future options to purchase or extend, and agreements where the amount of consideration may be increased or decreased by reference to the amount realized upon the sale or disposition of the property.

The link below will take you to a memo drafted by the Ohio Department of Taxation explaining how leases of motor vehicles are taxed.

Leasing Memo

 

Sales to Non-Residents of Ohio

Sales made in Ohio to a non-resident of Ohio that will be immediately removed from this state are generally exempt from Ohio sales tax.  Sales of motor vehicles that will be immediately removed to Arizona, California, Florida, Indiana, Massachusetts, Michigan, and South Carolina are the only sales that are the exception to this rule.  Please see the Information Release for details.

 

The below chart can be used for a quick guide on how to calculate sales tax for these states:

 

 

State

Sales Tax Rate

Trade-In Allowance

Special Provisions

Arizona

6.60%

Yes –New and Used

 

California

7.25%

No

 

Florida

6.00%

Yes- New and Used

 

Indiana

7.00%

Yes-New and Used

Nonresident exemption for RVs and trailers with a load capacity of at least 2200 pounds

Massachusetts

6.25%

Yes-New and Used

 

Michigan

6.00%

No

 

South Carolina

5.00%

Yes-New and Used

Tax cap of $300.00

 

Frequently Asked Questions Tool

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on  the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

  

If I purchase a vehicle at a local auto dealer and have the vehicle shipped out of the state or country, do I pay Ohio sales tax?

If the dealership arranges for and ships the vehicle, no Ohio sales tax is due because the transaction is in interstate commerce.  When the vehicle is titled, use exemption code IC.

If the vehicle is shipped out of the country by the purchaser, Ohio sales tax is due.

If the vehicle is shipped out of the state by the purchaser who is not a resident of Ohio, sales tax is due only if shipped to Arizona, California, Florida, Indiana, Massachusetts, Michigan, or South Carolina.  See Motor Vehicles - Sales of Motor Vehicles to Nonresidents of Ohio  for more information.

If I purchase a vehicle at a local auto dealer and have the vehicle shipped out of the state or country, do I pay Ohio sales tax?

If the dealership arranges for and ships the vehicle, no Ohio sales tax is due because the transaction is in interstate commerce.  When the vehicle is titled, use exemption code IC.

If the vehicle is shipped out of the country by the purchaser, Ohio sales tax is due.

If the vehicle is shipped out of the state by the purchaser who is not a resident of Ohio, sales tax is due only if shipped to Arizona, California, Florida, Indiana, Massachusetts, Michigan, or South Carolina.  See Motor Vehicles - Sales of Motor Vehicles to Nonresidents of Ohio  for more information.
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