Nebraska – Leased Motor Vehicles Guide

SALT Report 1147 – The Nebraska Department of Revenue has issued an updated information guide regarding the application of sales and use taxes for leased motor vehicles.

In Nebraska the gross receipts from the lease or rental of a motor vehicle are subject to local sales tax and should be taxed in the following manner:

  • Lessors who rent motor vehicles on a short-term basis, with no required recurring or periodic payments, should collect sales tax at the rate currently in effect at the location where the motor vehicle is leased.
  • Lessors who lease motor vehicles on a long-term basis, and require recurring payments must collect tax at the rate in effect at the primary property location.
  • For leases originating in Nebraska, the state and local sales tax continues to apply to the lease payments unless the lessee moves and re-registers the vehicle in another state or taxing jurisdiction within Nebraska.

The information in this guide pertains only to leases that are classified as “operating” leases.  Capital leases that are considered “conditional sales” or “financing leases” are not covered and therefore should be taxed on the total contract price at the beginning of the lease, with no additional tax due on the periodic lease payments. The guide also addresses lease buy-outs, leases originating outside of Nebraska, the lessor’s option, and leases to common or contract carriers.

For Further Information:

Nebraska Department of Revenue Information Guide