A trick I discovered last year is that you don't have to use miles for the entire rental car payment. In my case, the rate quoted via the SkyMiles Marketplace was approx. 37,000 miles for one week, or 1,000 miles plus a cash payment of $280. The rate quoted to me by the rental agency directly was more than $490. So for a 1,000 point redemption I saved $210. I was perfectly happy with that arrangement and it went off without a hitch (no fees or taxes due). Even got an upgrade as I have elite status with the rental agency.
Edited to add: if you happen to have miles banked with American also check with them. They use (I believe) the same service provider for the hotel/rental car booking system as Delta, but I have always found their prices to be less. A real world example: I just booked a car for Thanksgiving. Delta wanted 1,000 miles plus $190 for the car; American wanted 1,000 miles plus $122 for the exact same car and rental agency. I have started frequently booking my vacation car rentals this way. Bear in mind there IS a change fee and cancellation fee ($30 and $150, respectively, with AA), but if your plans are set in stone it's a phenomenal way to avoid exorbitant rental prices.
My understand is that when renting cars with AA miles that tax is owed directly to the rental company upon check in.