# Do you need to pay sales tax on car rental insurance?

**URL:** <https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834>\
**Category:** Factual Questions\
**Created:** [February 3, 2025, 6:31pm UTC](https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834 "2025-02-03T18:31:33Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\
**Post date:** [February 3, 2025, 6:31pm UTC](https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834/1 "2025-02-03T18:31:33Z")

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I traveled recently and rented a car. The total cost came with many, many fees/taxes. Reviewing the sales receipt it seems I was charged tax on the insurance coverage I bought from the rental agency (yes, stupidly expensive insurance but I did it).

My question is, should sales tax be applied to rental car insurance? It seems a no to me but I am not sure.

If it matters this was in New Jersey.

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**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\
**Post date:** [February 3, 2025, 7:01pm UTC](https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834/2 "2025-02-03T19:01:19Z")

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These things vary by state.

Yes for New Jersey, see section 92 of:

> **[new-jersey-dealer-tax-guide.pdf](https://www.factorywarrantylist.com/uploads/3/3/9/4/3394652/new-jersey-dealer-tax-guide.pdf)**
>
> 197.49 KB

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<div class="post-metadata">

**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\
**Post date:** [February 3, 2025, 7:05pm UTC](https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834/3 "2025-02-03T19:05:16Z")

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Well, that sucks.

Thanks for the answer!

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**Author:** ![asterion](https://avatars.discourse-cdn.com/v4/letter/a/4da419/32.png) [@asterion](https://boards.straightdope.com/u/asterion)\
**Post date:** [February 3, 2025, 7:42pm UTC](https://boards.straightdope.com/t/do-you-need-to-pay-sales-tax-on-car-rental-insurance/1013834/4 "2025-02-03T19:42:51Z")

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> [@PastTense](#):
>
> These things vary by state.
> 
> Yes for New Jersey, see section

Yep. New Mexico is a bit of an outlier in that it’s not a sales tax, it’s a gross receipts tax. Which winds up hitting all sorts of services that might not be taxed in other states. (The gross receipts tax on top of all the other fees and taxes for something like cable television seems like a particularly egregious example.)