When it comes to buying or leasing a Mazda, there are many factors that must be weighed to ensure you make the best financial decision for you and/or your business. This means carefully considering any cost differences, like how your new vehicle will be taxed.

So, are there any advantages to leasing or buying when it comes to taxes? This topic can get a little dense, but we're here to help you find the answers you're looking for at Mazda of New Bern.

Note that each state has different tax laws and rates, so be sure to check which applies to your location. We used North Carolina's tax laws and rates for the following information.

According to the North Carolina Department of Transportation in 2018, drivers pay a Highway-Use Tax, which goes directly to road improvements, instead of paying sales tax on new vehicle purchases in North Carolina. The Highway-Use Tax is a 3% fee on the total price each time a title is transferred. There is also a 3% Motor Vehicle Lease tax on vehicles leased for a period of at least 365 continuous days in North Carolina.

Tax advantages of leasing versus buying at Mazda of New Bern in New Bern | Man explaining information to woman

Taxes When Buying

How do taxes apply when buying a vehicle?

You will be paying the 3% Highway-Use Tax on the entire purchase price of the vehicle, plus additional fees like title and registration.

What if you trade-in a vehicle when buying?

In North Carolina, if you trade-in a vehicle, then you'll only pay tax on the difference between your trade-in value and the new car. For example, if you trade in a car worth $10,000 and you're buying a car worth $30,000, then you will only pay taxes on the $20,000 difference, which would be $1,200 in taxes.

Taxes When Leasing

How do taxes apply when leasing a vehicle?

For a leased vehicle, you will have to pay North Carolina's 3% motor vehicle lease tax on the entire lease payment, plus any relevant vehicle registration and license plate fees, at the time of signing.

Tax Benefits for Business Vehicles

Whether you buy or lease your company vehicle(s), you may deduct the entire cost of operation used for business from your taxes. You can use the standard mileage rate method or the actual expense method, which is explained in detail on the IRS webpage. If you qualify for both, you should do the math and see which one gives you a larger deduction.

  • Car leasing payments are tax-deductible.
  • Only the interest on a car loan is deductible as a business expense.
  • Both lease and owned vehicles may be eligible for depreciation.

Again, do the math and see what would make more sense considering the other factors that go into the decision like amount of driving, potential wear-and-tear, etc.

As for personal vehicles, you may not deduct any costs from your taxes. Although, you may claim sales tax from your personal vehicle if meet these 2 criteria:

  1. You itemize your deductions
  2. Your sales tax deductions (including the sales tax on your car) exceed your state income

What's The Verdict?

In short, taxes are just one factor to consider when deciding whether to buy or lease. The advantage really depends on the terms of your lease or purchase, your state's tax laws and rates, and the kind of usage you want out of your vehicle. Make sure you do the math and/or consult with a tax professional to make sure you sufficiently weigh your options.

Tax advantages of leasing versus buying at Mazda of New Bern in New Bern | man giving couple car key at dealership

Want to learn more about buying or leasing your next Mazda? Come on in and sit down with one of our wonderful staff members at Mazda of New Bern or contact us at 877-312-1355.

Contact

Mazda of New Bern

1715 Hwy 70 East
Directions New Bern, NC 28560

  • Sales: (252) 633-6161
  • Service: (252) 633-6161
  • Parts: (252) 633-6161

Hours

  • Monday 9:00 AM - 7:00 PM
  • Tuesday 9:00 AM - 7:00 PM
  • Wednesday 9:00 AM - 7:00 PM
  • Thursday 9:00 AM - 7:00 PM
  • Friday 9:00 AM - 7:0 0PM
  • Saturday 9:00 AM - 6:00 PM
  • Sunday Closed