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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, you pay 6.625% only on your monthly payments (plus the drive-off amount). On a $40,000 vehicle, that’s roughly $2,650 in tax on a purchase vs. $400–$500 spread across a 36-month lease. This tax treatment significantly favors leasing in NJ compared to states that tax the full capitalized cost.

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