How does NJ sales tax affect the lease vs buy decision?

In NJ, when you buy a car you pay 6.625% sales tax on the full purchase price. When you lease for more than six months, NJ collects the 6.625% tax upfront, usually on the total of the lease payments plus certain fees and any amount paid at signing, rather than on the full price, so it is typically less than the tax on a purchase. It is often rolled into the monthly payment. This tax treatment significantly favors leasing in NJ compared to states that tax the full capitalized cost.