Rental Car Taxes

8/30/2019

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.

State-by-State Comparison of Rental Car Taxes

State

Car Tax Rate

Source

Alabama

1.5%

Alabama Department of Revenue

Alaska

10%

Alaska Department of Revenue - Tax Division

Arizona

5%

Ariz. Rev. Stat § 28–5810

Arkansas

10%

Arkansas Department of Finance and Administration

California

None

N/A

Colorado

$2 fee/day

Colo. Rev. Stat. § 43-4-804(1)(b)(I)(A) 

Connecticut

3% plus $1 fee/day *

State of Connecitcut Department of Revenue 

Delaware

1.9914%

Del. Code Ann. tit. 30 §4302

District of Columbia

10.25%

DC Office of the Chief Financial Officer

Florida

$2/day

Fla. Stat. Title XIV  §212.0606

Georgia

N/A

N/A

Hawaii

$3/day with a valid Hawaii driver's license; $5/day without 

Hawaii Rev. Stat.  §18-251-2

Idaho

None

N/A

Illinois

5%

35 ILCS 155/3

Indiana

4%

Indiana Department of Revenue

Iowa

5%

Iowa Department of Revenue

Kansas

3.5%

Kansas Department of Revenue

Kentucky

6%

Kentucky Department of Revenue 

Louisiana

2.5%*

Louisiana Department of Revenue

Maine

10%

Maine Revenue Services

Maryland

11.5%

Maryland Manual On-Line

Massachusetts

N/A

N/A

Michigan

6% surcharge 

Michigan Department of Treasury

Minnesota

9.2% + 5% fee

Minnesota Stat § 297A-64

Mississippi

6%*

State of Mississippi Department of Revenue

Missouri

None

N/A

Montana

4%*

Mont. Code Ann. § 15-68-102

Nebraska

N/A

N/A

Nevada

10%

NRS 482.313

New Hampshire

9%

Department of Revenue Administration

New Jersey

$5 fee/day

Department of the Treasury

New Mexico

5% (“Leased”) + $2/day

New Mexico Taxation and Revenue 

New York

6%

The New York State Department of Taxation and Finance Bulletin Tax ST-825

North Carolina

8%

Department of Revenue

North Dakota

3%

 N.D. Cent. Code § 57-39.2-03.7.

Ohio

No*

N/A

Oklahoma

6%

Okla. Stat. Ann. tit. 68, § 2110(A)

Oregon

No

N/A

Pennsylvania

2% + $2 fee/day

Pennsylvania Department of Revenue 

Rhode Island

8%

R.I. Gen. Laws § 31-34.1-2(a) 

South Carolina

5% surcharge

South Carolina Department of Revenue

South Dakota

4.5%*

South Dakota Department of Revenue

Tennessee

3%

Tennessee Department of Revenue

Texas

10%

Texas Comptroller of Public Accounts

Utah

2.5%

Utah Code § 59-12-1201

Vermont

9%

32 V.S.A § 8903

Virginia

10%*

Virginia Department of Taxation

Washington

5.9%

Washington State Department of Revenue

West Virginia

$1-$1.50/day

W. Va. Code §17A-3-4

Wisconsin

5% fee

State of Wisconsin Department of Revenue

Wyoming

4% surcharge

Wyoming Department of Transportation

  1. 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.
  2. Louisiana - Levies a 2.5% state tax, plus 0.5% local tax.
  3. Mississippi - Plus 5% state sales tax (2% below the state general sale tax).
  4. Montana- The imposed sales tax is an exception to the 0.00% state sales tax rate. 
  5. South Dakota - Rental subject to state and municipal sales taxes, tourism tax, and motor vehicle gross receipts.
  6. 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.