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Leasing or renting a motor vehicle is a taxable sale in Idaho.
| Type of lease/rental | How the lease/rental works | When to collect sales tax |
|---|---|---|
| Basic lease or rental | The customer returns the motor vehicle to the lessor at the end of the lease or rental term. | Collect sales tax on each lease or rental payment. |
| Lease or rent with option to buy | The customer has the option of buying the motor vehicle during the lease or rental term or at the end of the term at fair market value. | Collect sales tax on each lease or rental payment and on the price the customer pays when buying the motor vehicle. |
| Lease/rent and purchase | The customer makes regular payments during the lease or rental term. At the end of the term, title to the motor vehicle passes to the customer for $0 or an amount that’s less than fair market value. | The customer will own the motor vehicle at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax on the sales price of the vehicle at the beginning of the term, when the sale is made (the contract is completed). |
You calculate the taxable sales price for a lease of a motor vehicle the same as the sale of a motor vehicle. See Sales price.
Out-of-state companies that lease motor vehicles in Idaho must follow all these requirements:
The following groups can buy a motor vehicle exempt from Idaho sales tax under certain conditions.
A nonresident can be an individual, a company, or an organization.
A nonresident that buys a motor vehicle for use outside of Idaho might qualify for exemption if all of the following apply:
Buyers likely don’t qualify for the exemption if they provide an Idaho driver’s license, Idaho address or Idaho contact information. You could be held liable for the sales tax if you don’t collect it.
The nonresident buyer must give you a completed 
Form ST-104NR – Sales Tax Exemption Certificate – Nonresident Vehicle/Vessel. Keep a copy of the form for your records, and forward a copy to the Tax Commission:
Buyers listed below are exempt from sales tax on everything they buy, including motor vehicles.
These agencies and organizations must give you a completed Form ST-101 – Sales Tax Resale or Exemption Certificate. Keep a copy of the exemption certificate for your records. The exemption doesn’t apply to buyers who are employees purchasing an item for personal use and not on behalf of the exempt agency. You could be held liable for the sales tax if you don’t collect it.
Note: For a complete list of exempt agencies and organizations, see our Exemptions guide.
The laws for buying a motor vehicle tax free are different for individual members of American Indian tribes than for the tribes themselves. Tribal members must take delivery of the motor vehicle on a reservation for the sale to be exempt from sales tax.
The buyer must give you a completed Form ST-133 – Sales Tax Exemption Certificate – Family or American Indian Sales. Keep a copy of the form for your records. Your records must clearly show that you delivered the motor vehicle to the reservation. Otherwise, you could be held liable for the sales tax.
You can sell trucks, buses, and other vehicles that are registered as weighing over 26,000 pounds, as well as trailers exempt when all of the following apply:
Glider kits attached to IRP-registered vehicles are exempt.
Repair parts for exempt IRP vehicles and trailers are taxable.
The buyer must give you a completed Form ST-104IC – Sales Tax Exemption Certificate – Interstate Commerce Vehicles. Keep a copy of the form for your records.
The certificate requires buyers to verify that they’ll use the vehicle in a fleet with at least 10 percent of its mileage outside of Idaho.
The motor vehicle must meet all these requirements to be exempt:
Note: Most recreational vehicles are never eligible for the production exemption. For more information, see the Farming and Ranching: Production Exemption guide.
The producer, farmer, or rancher must give you a completed Form ST-101, Idaho Resale or Exemption Certificate.
Vehicles & Vessels: Exemption Certificates. You can request a refund of sales tax when a customer stops making payments on a motor vehicle in certain circumstances.
You must bear the loss on the unpaid amount or amount claimed as worthless and one of the following must apply:
There are times you can’t request a refund of sales tax when a customer stops making payments. You can’t get a refund in either of these situations:
Calculate the refund based on how much of the sales price the buyer paid before default. You can read more in our Bad Debt white paper.
You can request a refund in one of two ways:
Take a credit on line 7 of Form 850, Idaho Sales and Use Tax Return:
Bad Debt white paper.You can request a refund on Form TCR – Sales Tax Refund Claim, if you don’t claim the refund in the month you record the bad debt adjustment. You must claim the refund within three years from the date you forwarded tax from the sale to the state.
Note: Companies that finance motor vehicle loans can request a proportionate refund of sales tax paid on those loans if the customer defaults. For detailed information, read our Bad Debt white paper.
You must refund the sales tax to the customer if you take back a motor vehicle and refund all the money.
You owe use tax on the cost of the motor vehicle if you remove a motor vehicle from your inventory and donate it to an organization as a gift or prize. Use tax is due on the wholesale book value of the motor vehicle if you can’t determine cost. Write your sales tax permit number on the title transfer to show you’ll pay use tax on the donation. Pay use tax with the return for the period in which you make the donation.
You owe use tax on the motor vehicle if you temporarily loan a motor vehicle from inventory to an individual, government, business, or nonprofit entity. Calculate the use tax you owe in one of two ways:
The only exception is when you temporarily donate a motor vehicle to a driver education program sponsored by a qualified nonprofit school.
Sales tax is due on the sale, lease, and rental of motor vehicles when they’re sold in Idaho unless a valid exemption applies.
What is the motor vehicle sales price for a dealer?
Leasing or renting a motor vehicle
Defaults and repossessions on motor vehicle loans
Donating or loaning a motor vehicle
Using motor vehicles in your business
Buying motor vehicles for resale
Sales or use tax is due on the sale, lease, rental, transfer, donation, or use of a motor vehicle in Idaho unless a valid exemption applies.
Leasing out or renting out your own motor vehicle
Ground transportation companies include common carriers such as limousines, bus companies, trucking companies and ride-sharing services that transport people, freight, and other items using roads and highways.
The amount that a ground transportation company charges to move people or property isn’t taxable. These charges include:
Examples:
This guide explains sales and use tax that ground transportation companies charge their customers on their purchases. Shipping fees are explained in Retailers – Sales price.
Items a ground transportation company buys to operate the business are generally taxable. Taxable items include:
Goods a customer buys must be shipped directly to a location outside of Idaho to be exempt. For example, when customers buy goods that a common carrier ships directly out of state, those goods aren’t taxable in Idaho. But, when a common carrier buys goods and uses itself as the shipper, the goods are exempt in Idaho only if all of these apply:
The amount an air transportation company charges to fly people or property isn’t taxable. Nontaxable services include:
Air transportation companies pay tax on items they buy to operate the business. This includes:
Aircraft and parts are exempt for some transportation companies and aircraft maintenance companies including:
The amount a rail transportation company charges to transport people or property isn’t taxable. This includes:
Examples:
Rail transportation companies must pay tax on items they buy to operate the business. These items include:
A rail transportation company can buy certain equipment tax exempt.
Railroad rolling stock that qualifies for the exemption is property that’s both:
Examples:
Parts, materials and equipment for rebuilding and remanufacturing railroad rolling stock in Idaho that qualify for the exemptions are:
When transportation companies like buses, airlines or railways sell passengers property that isn’t included in the price of a ticket, the property is taxable.
Transportation companies making taxable sales are retailers who must have an Idaho seller’s permit. They must collect sales tax on items they sell, unless the passenger is exempt. They must then forward any sales tax they collect to the Tax Commission. See “Retailers.”
The transportation company can buy the items exempt. They must collect tax when they sell to passengers.
The transportation company must charge Idaho sales tax when it sells products during a trip that starts or ends in Idaho.
Note: Passengers can buy products exempt if they qualify for a valid exemption and give the transportation company a completed Form ST-101 – Sales Tax Resale or Exemption Certificate.