May 1, 2026
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California Lease Tax Study Table


California

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Name Data References
Lease Tax Study ID 5 5
State California California
Abbreviation CA CA
Comments MTE – Dealer Location – tax will be due to California for the entire period
Method of Taxation Lessor elects Cal. Code Regs. 1660(c)(1), (2), (3)
Tax Base Methodology The total amount for which the property is rented including any payments required by the lease Cal. Rev. & Tax Code 6011, Cal. Rev. & Tax Code 6012, and Cal. Code Regs. 1660(c)(1)
Imposition Non- MTE – Lessee, however lessor could be liable for failure to report; MTE – Lessor The term “mobile transportation equipment” includes only equipment for use in transporting persons or property for substantial distances, such as trucks Cal. Rev. & Tax Code Sec. 6051, Cal. Code Regs. 6201, Cal. Code Regs. 6202, and Cal. Code Regs. 1660(b)(1)
Lease Tax Study Applicable State Rate Currently 7.25%. Effective 1/1/2013 7.50% Effective 1/1/17 7.25% Cal. Rev. & Tax Code Sec. 6201, Cal. Code Regs. 7203, and Publication 44 District Taxes
Responsibility for Tax on Upfront Charges Dealer; Except where election is made to purchase MTE for re-sale – then lessor is responsible Cal. Code Regs. 1660(c)(1)
SST Member Member of advisory states – no enacted conformity laws to date Cal. Rev. & Tax Code Sec. 6025
Local Tax Situs Standard Lease Garaging Cal. Code Regs. 1660(c)(1) and Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
State Tax Situs Standard Lease Garaging Cal. Code Regs. 1660(c)(1) and Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
Situs for Singlepay Leases Garaging Cal. Code Regs. 1660(c)(1) and Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
Trade In Deductions Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), and Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
Trade In Deductions Comments .
Manufacturers Rebates Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), and Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
Manufacturers Rebates Comments .
Down Payments Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Down Payments Comments .
Title and Registration Fees Non-Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Title and Registration Fees Comments .
Monthly Rent Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Monthly Rent Comments .
Lease Extensions Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Lease Extensions Comments .
Termination Fees Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Code Regs. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Termination Fees Comments .
Disposition Fees Non-Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, and Cal. Code Regs. 1660(c)(1)(D)
Disposition Fees Comments .
Excess Mileage Charges Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use, and Tax Tips for Leasing Tangible Personal Property in California, #46
Excess Mileage Charges Comments .
Excess Wear and Damage Charges Non-Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), Cal. Code Regs. 1661 (b), SUTA Series 330.1820, SUTA Series 330.3194, and SUTA Series 330.3225
Excess Wear and Damage Charges Comments .
Late Payment Fees Non-Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, and Cal. Code Regs. 1660(c)(1)(E)
Late Payment Fees Comments .
Lease Extension Fee Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), and Cal. Code Regs. 1661 (b)
Lease Extension Fee Comments .
Bad Check Fees Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), and Cal. Code Regs. 1661 (b)
Bad Check Fees Comments May be non-taxable. Not specifically addressed in the law or regulations. A position could be taken that since the State recognizes the non-taxability of late payments, bad check fees are similar.
Administrative Fee Paid in Cash Upfront Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), and Cal. Code Regs. 1661 (b)
Administrative Fee Paid in Cash Upfront Comments .
Early Termination Liability Taxable Cal. Rev. & Tax Code Sec. 6011, Cal. Rev. & Tax Code Sec. 6012, Cal. Code Regs. 1660(c)(1), and Cal. Code Regs. 1661 (b)
Early Termination Liability Comments .
Off Lease Vehicle Sales Tax Responsibility and Method Lessor files return unless the sale is to the lessee in which case Lessor can either file a return or forgo doing so and make lessee responsible for remitting tax at registration – DMV Cal. Code Regs. 1610(d)(2) and Cal. Code Regs. 1660(c)(7)
Exemptions General Exemptions are very limited. Leases to United States Government, leases where delivery occurs on the reservation to a tribal member. Cal. Code Regs. 1660(c)(1) and Reg. 1616(d)(4)(F)
Credit for Tax Paid Upfront in Another State Credit Available Cal. Rev. & Tax Code Sec. 6277, Cal. Rev. & Tax Code Sec. 6406, and Cal. Code Regs. 1660(c)(8)
Optional Service Contracts Separate – Retail Non-Taxable Cal. Code Regs. 1546(b)(3), SUTA Series 315.0210, and BOE Publication 119
Optional Service Contracts Separate Comments Non-Taxable when capitalized into the lease
Optional Insurance Products Separate – Retail Non-Taxable SUTA Series 330.3360 and SUTA Series 330.3174
Optional Insurance Products Separate Comments Non-Taxable when capitalized into the lease. With respect to the due date change fee and the assumption fee, both of these fees are required under the lease and are included in the rentals payable and tax applies to these charges. The separately stated waiver fee is optional and not required by the lease and therefore is not subject to tax. 4/30/97 (SLF Comment – waiver fee purchased separately after the lease term began). When the lessee of an automobile is required under the lease contract to obtain automobile insurance for his own benefit and the lessor selling such insurance makes an additional charge, separately stated therefor, the charge for insurance is excludable from the lessor’s taxable rental receipts provided the lessee is not required to purchase the insurance from the lessor, but may purchase it from an insurer of his own choice.
Assumption Fees Taxable California Regulation Section 1660(c)(1)
Assumption Fees Comments .
Tax Type To Use Leases Use Tax California Regulation 1660(c)
Tax Type To Use Sales Use Tax California Regulation Section 1610(d)(2)
Situs Of Sale Registration Address Pamphlet #34 – Tax Tips for Motor Vehicle Dealers, Sales and Use
Insurance Payoffs No specific reference
Insurance Payoffs Comments .
Tolls and Tickets Non-Taxable Cal. Code Regs. 1660(c)(1)
Tolls and Tickets Comments .
Property Tax Charges Non-Taxable Cal. Code Regs. 1660(c)(1)
Property Tax Charges Comments Non-taxable if lessor is a bank or financial institution.
Repo Fees Collection Agency Non-Taxable California Regulation Section 1660(c)(1)(A)
Leases to Military Personnel Taxable Tax Tips for Leasing Tangible Personal Property in California, #46
Leases to Military Personnel Comments .
URL Additional .
References Comments Lessor elects monthly


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