Sales and Use Tax Directive 26-2

Effective October 1, 2026, peer-to-peer vehicle sharing providers are required to collect tax on their gross receipts from lease, rentals, and vehicle subscriptions. This tax is in addition to all other taxes and fees imposed.

The following definitions1 apply to this directive:  

• Limited possession commitment - Long‑term lease or rental, short‑term lease or rental, and vehicle subscriptions.
• Long‑term lease or rental - A lease or rental made under a written agreement to lease or rent one or more vehicles to the same person for a period of at least 365 continuous days and that is not a vehicle subscription.
• Peer-to-peer vehicle sharing provider - A person or entity that operates, facilitates, or administers a peer-to-peer vehicle sharing program as defined in G.S. § 20-280.15.
• Retailer - A retailer as defined in G.S. § 105-164.3 who is engaged in the business of offering short-term leases or rentals, long-term leases or rentals, or vehicle subscriptions for motor vehicles.
• Short-term lease or rental - A lease or rental of a motor vehicle or motor vehicles by a person, including a vehicle sharing service or a peer-to-peer vehicle sharing provider, that is not a long-term lease or rental or a vehicle subscription. 

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  G.S. § 105-187.1.

A peer-to-peer vehicle sharing provider is required to pay tax to the Secretary of Revenue on the gross receipts derived from limited possession commitments. The tax is for the privilege of using the highways of this state. The tax is imposed on the peer-to-peer vehicle sharing provider but is to be added to the limited possession commitment and paid by the person who enters into a limited possession commitment with the retailer.  

The tax applies to the gross receipts derived from rentals or leases billed on or after October 1, 2026.

For additional information regarding the gross receipts subject to tax, refer to the Alternate Highway Use Tax Bulletin.

Note: This directive is limited to the tax on limited possession commitments found in G.S. § 105-187.5. Local jurisdictions in the state levy additional taxes on certain motor vehicle leases and rentals. Peer-to-peer vehicle sharing providers should be aware of these local taxes that are not administered by the North Carolina Department of Revenue.1

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  See Session Law 2026-31, Section 7.2 for recent changes to these provisions.

As of October 1, 2026, the tax rates due on limited possession commitments are as follows:  

• Short-term lease or rental - 8%
• Vehicle Subscription - 5%
• Long-term lease or rental - 3%

The law provides a maximum tax for a continuous limited possession commitment to the same person. The maximum tax only applies to limited possession commitments of certain commercial motor vehicles and recreational vehicles. The maximum does not apply to other motor vehicles. The maximum tax is found in G.S. § 105-187.3(a1). 

Registration

A peer-to-peer vehicle sharing provider must register for a Motor Vehicle Lease and Subscription Tax account with NCDOR before October 1, 2026. They may register online using the online business registration portal or by paper using Form NC-BR. 

Reporting

The tax due on limited possession commitments must be reported on Form E-500F, Motor Vehicle Lease and Subscription Tax Return. The tax return and payments are due according to the filing frequency assigned to the peer-to-peer vehicle sharing provider upon registration.

Taxpayers assigned a quarterly filing frequency must file on or before the last day of January, April, July, and October for the preceding calendar quarter. The taxes due must be remitted with the quarterly return.

Taxpayers assigned a monthly filing frequency must file on or before the 20th day of each month for all taxes due for the preceding calendar month. The taxes due must be remitted with the monthly return.

Taxpayers assigned a monthly filing with prepayment filing frequency must file on or before the 20th day of each month for the preceding calendar month. The taxes due must be remitted with the monthly return. In addition, these taxpayers must make a prepayment of the next month's liability when filing the monthly return. 

Session law 2026-311 made conforming changes to the tax levied in G.S. § 105-187.5. The changes included modifying the name of the tax from “Alternate tax for a limited possession commitment” to “Tax on a limited possession commitment.”  

Except as modified by this directive, retailers of limited possession commitments should continue to follow the guidance in the Alternative Highway Use Tax Bulletins. References to the “alternate highway use tax” or “alternative highway use tax” in the Bulletins refer to the tax levied in G.S. § 105-187.5 which is now named the “Tax on a limited possession commitment.”

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  In addition, Section 32.5 of Session Law 2026-46 made a technical correction to these changes.