Motor Vehicle Lease and Rental Tax
(Alternate Highway Use Tax)

When applying for a North Carolina Certificate of Title for a motor vehicle purchased by a lessor for lease or rental, the lessor may elect to pay the highway use tax to the Commissioner of Motor Vehicles or he may elect to collect and remit the tax to the Secretary of Revenue on the lease or rental receipts derived from the vehicle. The rate of tax on the gross receipts from a short term (to the same person for less than 365 continuous days) lease or rental of a motor vehicle is 8%, and the tax rate on a long term (to the same person for at least 365 continuous days) lease or rental of a motor vehicle is 3%. A maximum tax may apply in some instances for a continuous lease or rental of a motor vehicle to the same person.

The alternate highway use tax is to be reported separately to the Department on the Motor Vehicle Lease and Rental Tax Return, Form E-500F. Information about the filing frequency and due date requirements can be found in Filing Frequency and Due Dates. For additional information on the highway use tax, refer to Section 35 of the Sales and Use Tax Technical Bulletins.