Planning to rent a car? Don’t be surprised if it costs more than you anticipated.
The final bill for a typical short-term rental car contains more hidden costs than many travelers realize.
In total, more than 40 states levy a charge on rental cars, either by imposing an additional excise tax, daily fee, or both. At least 15 states authorize local governments to impose their own taxes or fees and rental car companies add on charges for off-site rentals, airport fees, and insurance coverage. As states grapple with budget cuts and seek to raise revenues, rental car taxes that are perceived as targeting visitors are more palatable than other options.
Combined state and local rental and sales taxes (not including miscellaneous fees) can add up quickly, though, with rates ranging from less than 2 percent to more than 19 percent, the latter of which can cause sticker shock for visitors to the state.
Below is a state-by-state comparison of state motor vehicle passenger rental taxes.
Related: NCSL LegisBrief, "Rental Car Taxes," 2015.
- Connecticut - As of January 1, 2018, the 3% surchage on rental or passenger motor vehicles is no longer imposed. Rental companies have the optoion to charge individually itemized charges or fee on rentals for a period of less than 31 days. The sales tax rate of 9.35% applies to rental or lease of a passenger motor vehicle for a period of 30 or more days.
- Louisiana - Levies a 2.5% state tax, plus 0.5% local tax.
- Mississippi - Plus 5% state sales tax (2% below the state general sale tax).
- Montana- The imposed sales tax is an exception to the 0.00% state sales tax rate.
- South Dakota - Rental subject to state and municipal sales taxes, tourism tax, and motor vehicle gross receipts.
- Virginia - Includes rental tax, rental fee, and local tax administered by Virginia Department of Taxation.
*Chart reflects state tax rates only. Does not include local, airport, or sales taxes.
Source: NCSL 50-state search for relevant statutes and agency websites.