Car Lease Calculator

Q: Do EV tax credits still apply to leases in 2026?

No. The OBBBA eliminated all EV tax credits after September 30, 2025 — including the §30D new vehicle credit ($7,500), the §25E used vehicle credit ($4,000), and the §45W commercial vehicle credit that dealers used as a lease loophole. None of these are available for 2026 leases.

Q: How does sales tax work on a car lease?

Most states (CA, NY, FL, IL, NJ) tax each monthly payment. Texas taxes the full capitalized cost upfront at signing. Ohio taxes the sum of all lease payments upfront. States like OR, NH, MT, DE, and AK have no sales tax. The method significantly affects your upfront costs.

Q: Should I put money down on a lease?

Generally, no — or as little as possible. A cap cost reduction lowers your monthly payment but carries a big risk: if the car is totaled or stolen, insurance pays the leasing company, not you. You lose the entire down payment. Unlike buying, a lease down payment doesn't become equity.

Calculate your real lease payment — including money factor, residual value, and your state's tax method. Compare lease vs buy, or find the max car for your budget.

Calculate your monthly lease payment with taxes

MSRP (sticker price)

Manufacturer's suggested retail price

Negotiated price

Your agreed price — typically 3–8% below MSRP

State

CA: tax on each monthly payment

Residual value

% of MSRP

Higher = lower payment. SUV: 50–60%, Sedan: 45–55%, Truck: 55–65%

Money factor

MF × 2400 = APR. Ask dealer for this number

Lease term

Cap cost reduction

Down payment on a lease. Reduces monthly but risky if car totaled

Dealer/doc fees

Acquisition, doc, title fees. Avg $895–$1,095

Trade-in value

Annual mileage

Over-mileage: $0.15–0.25/mile penalty

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How to Use This Calculator

My Lease Payment tab

The default tab. Enter the MSRP (sticker price), your negotiated price, and state. The calculator computes depreciation fee, finance fee (rent charge), and sales tax for your state. Expand "More options" to adjust residual value, money factor, term, cap cost reduction, dealer fees, trade-in, and mileage allowance.

Lease vs Buy tab

Compares the total cost of leasing vs buying the same car. Enter lease terms and buy terms (down payment, APR, loan length). See which option costs less over the lease term and over your chosen ownership period. The calculator accounts for equity buildup when buying and the depreciation loss on both sides.

What Can I Lease? tab

Enter your monthly budget and the calculator works backwards to find the maximum MSRP you can afford. Includes vehicle examples in your price range and accounts for your state's tax method.

Share your result

Every input is encoded in the URL. Click Share, send the link to your partner or financial advisor — they'll see your exact numbers.

The Formula

Car lease payments have two components — depreciation and finance charge:

Monthly Payment = Depreciation Fee + Finance Fee + Tax

Depreciation Fee = (Net Cap Cost − Residual Value) ÷ Term
Finance Fee = (Net Cap Cost + Residual Value) × Money Factor

Net Cap Cost = Negotiated Price + Fees − Cap Reduction − Trade-in
Residual Value = MSRP × Residual %
APR = Money Factor × 2,400

Money factor is the lease equivalent of an interest rate. Multiply by 2,400 to convert to APR. A money factor of 0.00125 equals 3.0% APR. Always ask the dealer for this number — it's not always disclosed upfront.

Residual value is what the leasing company predicts the car will be worth at lease end, expressed as a percentage of MSRP. Higher residual = lower depreciation = lower payment.

Example

Sarah — Dallas, TX

Sarah is a marketing manager ($85K salary) looking to lease a 2026 Honda CR-V EX-L. MSRP: $36,000. She negotiated $34,200 (5% off). The dealer quoted a money factor of 0.00125 and 55% residual on a 36-month lease.

My Lease Payment tab

Depreciation fee$400/mo

Finance fee$59/mo

Base payment$459/mo

TX upfront tax (6.25% on cap cost)$2,200 at signing

Due at signing$5,654

Total lease cost (36mo)$21,179

Because Texas taxes the full capitalized cost upfront, Sarah pays $2,200 in tax at signing rather than monthly. Her monthly payment is just $459 with no tax added each month.

Lease vs Buy tab

Lease total (36mo)$21,179

Buy total (36mo of 60mo loan)$27,218

Car value after 36mo$20,964

Buy equity after 36mo$6,743

Buy net cost$20,475

Over 36 months, buying is slightly cheaper ($20,475 vs $21,179) because Sarah builds equity. But she'd still owe 24 months on the loan. Over 5 years, buying saves significantly because there's no second lease to sign.

FAQ

What is a money factor and how do I convert it to APR? ▼

A money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to get the equivalent APR. For example, a money factor of 0.00125 = 3.0% APR. Excellent credit (750+) typically gets money factors of 0.0005–0.0015. The dealer isn't always required to disclose it, so you have to ask. It's one of the most important numbers in a lease negotiation.

Is it better to lease or buy a car in 2026? ▼

It depends on how long you keep cars. If you trade every 2–3 years, leasing is often cheaper because you avoid the steepest depreciation and never deal with out-of-warranty repairs. If you keep cars 5+ years, buying almost always wins because you build equity and eventually drive payment-free. In 2026, the OBBBA car loan interest deduction ($10K/yr) gives buyers of new US-assembled vehicles a tax advantage that lessees don't get.

Do EV tax credits still apply to leases in 2026? ▼

No. The OBBBA (One Big Beautiful Bill Act) eliminated all EV tax credits after September 30, 2025. This includes the §30D new vehicle credit ($7,500), the §25E used vehicle credit ($4,000), and the §45W commercial vehicle credit that dealers used as a "lease loophole" to pass EV credits to consumers. None of these are available for 2026 leases.

How does sales tax work on a car lease? ▼

It varies by state. Most states (CA, NY, FL, IL, NJ, and others) tax each monthly payment. Texas taxes the full capitalized cost upfront at signing. Ohio taxes the sum of all lease payments upfront. States like OR, NH, MT, DE, and AK have no sales tax. The method affects your cash flow significantly — Texas lessees pay thousands more at signing but nothing extra monthly.

Should I put money down on a lease? ▼

Generally, no — or as little as possible. A "cap cost reduction" (down payment on a lease) lowers your monthly payment but carries a big risk: if the car is totaled or stolen, insurance pays the leasing company, not you. You'd lose the entire down payment. Unlike buying, where your down payment becomes equity, a lease down payment disappears into the lease structure. If you have $3,000, consider keeping it in savings and accepting the higher monthly payment.

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