How Are Georgia’s Auto Lease Laws Changing?

As of January 1, 2018, TAVT on leased vehicles are now calculated based on the total of lease payments rather than the full value of the vehicle.

If you are considering a lease option on your next car, it is important to understand how you benefit from the new Georgia auto lease tax implemented in 2018. Previously, the tax was paid upfront (or rolled into financing) at the rate of 7.0% of the fair market value of the vehicle, as determined by the Georgia Department of Revenue, or the vehicle selling price (whichever was greater).*

The revised law provides that you pay taxes on the sum of your lease payments, rather than on the total value of your car, and it is payable either up-front or during the course of your lease payments. This one-time tax covers the sales tax on down payments, the sales tax on monthly lease payments, as well as the annual ad valorem property tax that was a product of the previous tax laws.

Rick Hendrick Buick GMC Duluth strives to keep you aware of anything affecting your ability to buy or lease a new vehicle, making the purchasing process as easy as possible.

What does HB 340 mean for you?

Previously, if you bought or leased a $20,000 car, you will be assessed $1,400 in TAVT. The TAVT is calculated based on the price of the vehicle, due at signing. The new rules would mean that on a $299/month base lease payment, you would be assessed based on the sum of the lease payments, or 10,764. You have the option to pay this amount, which is 753.48 (instead of $1,400) at signing OR throughout the term of the lease. This means that your amount due at signing could be thousands of dollars less than before the law. Also, on a $20,000 vehicle, the new law means 746.52 in savings.

What is TAVT?

TAVT stands for Title Ad Valorem TAX. Motor vehicles purchased on or after March 1, 2013 and titled in this state are exempt from sales and use tax and annual ad valorem tax, also known as the “birthday tax”. These taxes are replaced by a one-time tax that is imposed on the fair market value of the vehicle called the title ad valorem tax fee (“TAVT”).**

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