Arizona sales tax changes

Tracking state and local sales tax rate and rule changes in Arizona


Arizona sales tax changes effective July 2019

As voted on and approved November 6, 2018, the retail sales tax rate in Flagstaff, Arizona will increase to 2.281% effective July 1, 2019. Additional details available from the Arizona Department of Revenue.

City County Old Rate Rate Change New Rate  
Flagstaff Coconino County 2.051% +0.230% 2.281%  
Arizona Sales Tax Rate Guide

Sales tax guide for Arizona businesses

Our free, online guide covers all aspects of managing Arizona sales tax compliance. Topics include:

  • Business registration
  • Collecting sales tax
  • Filing sales tax returns
  • State nexus obligations
  • And more!

Visit the guide

Arizona sales tax changes archive

In November 2018, the people of Mesa, Arizona, voted to increase local transaction privilege tax rates in order to fund fire, police, and medical services.

Starting March 1, 2019, the following business classifications in Mesa will be taxed at 2%, plus the state rate (5.6%):

  • Advertising
  • Amusement
  • Communications
  • Contracting (owner builder, prime, and speculative builder)
  • Hotels
  • Job printing
  • Maintenance, repair, renovation, and alteration (MRRA)
  • Manufactured buildings
  • Publication
  • Rental, leasing, and licensing for use (commercial and residential)
  • Rental, leasing, and licensing for use of tangible personal property
  • Restaurants and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Use tax (inventory and purchases)
  • Utilities
  • Wastewater removal services

The 2% rate also applies to online marketplace lodging transactions. As of January 1, 2019, all online short-term rental marketplaces are required to register with the Arizona Department of Revenue and charge state and local tax on their bookings. Learn more.


Two jurisdictions in Arizona are changing the local tax rates on February 1, 2019. Although commonly referred to as sales tax, Arizona actually imposes a transaction privilege tax (TPT) on vendors for the privilege of doing business in the state.

Different business activities, or classifications, may be subject to different tax rates within one jurisdiction. For example, in Goodyear, the rate for advertising is 2.5%, the rate for contracting is 3.5%, the rate for retail sales of food for home consumption is 2%, and the rate for restaurants and bars is 4%. However, it isn’t unusual for many classifications within a district to share the same rate.

Starting February 1, 2019, Guadalupe is adding a 4% use tax on purchases and a 4% use tax on inventory (i.e., items pulled from inventory for use). However, the Town of Guadalupe is exempt from both.

Also, as of February 1, Scottsdale is increasing the TPT from 1.65% to 1.75% for the following business codes:

  • Advertising
  • Amusement
  • Commercial rental, leasing, and licensing for use
  • Communications
  • Contracting, owner builder
  • Contracting, prime
  • Contracting, speculative builder
  • Feed at wholesale
  • Job printing
  • Maintenance, repair, replacement, or alteration (MRRA) amount
  • Manufactured buildings
  • Publication
  • Residential rental, leasing, and licensing for use
  • Rental, leasing, and licensing for use of tangible personal property
  • Restaurant and bars
  • Retail sales
  • Retail sales of food for home consumption
  • Timbering and other extraction
  • Transporting
  • Utilities
  • Wastewater removal services

Scottsdale is also increasing the use tax rate on purchases and items pulled from inventory from 1.45% to 1.55%. Rate increases that take effect February 1, 2019, will be in place for 10 years and will fund transportation improvement projects. See the Arizona Department of Revenue for additional details.


At least one local transaction privilege tax (TPT) rate change took effect in Arizona on January 1, 2019. The TPT is Arizona’s version of a sales tax: Instead of taxing the transaction, or sale, it taxes the vendor for the privilege of doing business in the state. However, the TPT feels like a sales tax to customers because vendors typically pass the tax on to them.

Different business activities may be subject to different tax rates in Arizona, as evidenced by the following rate change.

On January 1, 2019, the Town of Marana decreased the TPT rate from 2.5% to 2% for the following business classifications:

  • Amusement
  • Commercial rental, leasing, and licensing for use of real property
  • Hotels
  • Job printing
  • Manufactured buildings
  • MMRA amount
  • Publication
  • Rental, leasing, and licensing for use of tangible personal property
  • Rental occupancy
  • Restaurants and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Use tax from inventory
  • Use tax purchases

Rates for the following business classifications in Marana dropped from 4.5% to 4%:

  • Communications
  • Utilities

There’s no change to the rates for the following business classifications in Marana:

  • Contracting, owner builder
  • Contracting, prime
  • Hotel/motel (additional tax)
  • Severance, metal mining

Finally, Marana no longer has the following business classifications:

  • Retail sales, single item portion over $5,000
  • Use tax purchase, single item portion over $5,000

TPT license renewals

All licensed businesses in Arizona were required to renew their Arizona Transaction Privilege Tax license by January 1, 2019.


Arizona imposes a transaction privilege tax (TPT) on vendors for the privilege of doing business in the state. Although commonly referred to as a sales tax and passed on to customers, it’s not a tax on sales transactions.

On December 1, 2018, the TPT rate in Huachuca City is increasing from 1.5% to 1.9% for the following tax codes:

  • Advertising
  • Amusement
  • Communications
  • Contracting, owner builder
  • Contracting, prime
  • Contracting, speculative builder
  • Feed at wholesale
  • Hotels
  • Job printing
  • Maintenance, repair, replacement, or alteration (MRRA)
  • Manufactured buildings
  • Publication
  • Rental, leasing, and licensing for use of tangible personal property
  • Rental occupancy
  • Restaurants and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Use tax purchases (new)
  • Use tax from inventory (new)
  • Utilities

The rates for the following codes will decrease from 1.5% to 1%:

  • Commercial rental, leasing, and licensing for use
  • Rental, leasing, and licensing for use

Transaction privilege tax licenses expire at the end of 2018. Every business that has an Arizona transaction privilege tax license is required to renew it before January 1, 2019. Additional information.


Local transaction privilege tax (TPT) in the City of Sedona is set to increase on March 1, 2018. The TPT is a tax on the privilege of doing business in Arizona. It’s not a tax on the sale but rather a tax on the vendor. Like sales tax, however, it’s commonly passed on to consumers.

In Arizona, more than 15 different business classifications may be taxed at different rates. Sedona taxes the following at the same rate, which will jump from 3% to 3.5% on March 1:

  • Advertising
  • Amusements
  • Commercial rental, leasing, and licensing for use
  • Communications
  • Contracting — owner builder
  • Contracting — prime
  • Contracting — speculative builder
  • Hotels
  • Job printing
  • Manufactured buildings
  • MRRA (maintenance, repair, replacement, or alteration)
  • Publication
  • Rental, leasing, and licensing for use of tangible personal property (TPP)
  • Restaurants and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Utilities

As of March 1, 2018, the local tax rate in Tucson is 2.6% on the following business classifications:

  • Amusements
  • Commercial rental, leasing, and licensing for use
  • Communications
  • Contracting — owner builder
  • Contracting — prime
  • Contracting — speculative builder
  • Job printing
  • Manufactured buildings
  • MRRA (maintenance, repair, replacement, or alteration)
  • Publication
  • Rental, leasing, and licensing for use of tangible personal property (TPP)
  • Restaurants and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Utilities
  • Use tax on purchases
  • Use tax on inventory

The 2.6% rate is a 0.1% increase and is scheduled to remain in effect through December 31, 2018.

Additional details are available from the Arizona Department of Revenue.


There will be a handful of changes to local transaction privilege tax (TPT) rates in Arizona as of Jan. 1, 2018. Rather than a sales tax, the Grand Canyon State imposes a tax on vendors for the privilege of doing business in the state. Like a sales tax, however, TPT is usually passed on to consumers. The Arizona Department of Revenue collects TPT for cities and counties.

City changes

Globe is eliminating its two-tiered tax rate and adding a 2.3% use tax for inventory and purchases.

Prescott is increasing the tax rate from 2% to 2.75% for the following business classifications:

  • Advertising
  • Amusements
  • Communications
  • Contracting (prime, owner builder, and speculative builder)
  • Feed at wholesale
  • Hotels
  • Job printing
  • Manufactured buildings
  • MRRA (maintenance, repair, replacement, or alteration)
  • Publication
  • Rental, leasing, and licensing for use of tangible personal property
  • Residential and commercial rental, leasing, and licensing for use
  • Restaurant and bars
  • Retail sales
  • Retail sales of food for home consumption
  • Timbering and other extraction
  • Transporting
  • Use tax from inventory and purchases
  • Utilities

In addition, it’s now (slightly) more affordable to do business in Chandler — the city is reducing fees for obtaining or renewing business licenses from $50 to $2.

More details about the above changes are available from Arizona’s Model City Tax Code.


The following sales tax rate changes for Arizona will be effective on December 1, 2017.

Apache Junction is reducing the license fee for the transaction privilege and use tax from $50 to $2. However, this substantial drop doesn’t apply to all business classes. The license fee remains $50 for commercial rental, leasing, and licensing for use.

Pinetop-Lakeside is increasing the TPT rate from 2.5% to 3% for the following business classifications:

  • Advertising
  • Amusements
  • Commercial rental, leasing, and licensing for use
  • Communications
  • Contracting (prime, owner builders, and speculative builders)
  • Hotels
  • Job printing
  • MRRA amount (maintenance, repair, replacement, and alteration)
  • Manufactured buildings
  • Publication
  • Rental leasing, licensing for use of tangible personal property
  • Residential rental, leasing, and licensing for use
  • Restaurant and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Utilities

Rate changes effective Nov. 1, 2017

Kingman is increasing the TPT rate from 2.5% to 3.5% as of Nov. 1, for the following business classifications:

  • Advertising
  • Amusements
  • Communications
  • Contracting (prime and owner builders)
  • Hotels
  • Job printing
  • MRRA amount (maintenance, repair, replacement, and alteration)
  • Manufactured buildings
  • Publication
  • Rental leasing, licensing for use of tangible personal property
  • Restaurant and bars
  • Retail sales
  • Timbering and other extraction
  • Transporting
  • Use tax inventory
  • Use tax purchases
  • Utilities

Tucson reduced the fees on recreation vehicle campers that meet the definition of hotels. Prior to Sept. 1, the rate was $4 per night; it’s now $2 per night.


TPT rates in Payson increased from 2.12% to 3% for the following business classifications:

  • Advertising
  • Amusements
  • Commercial rental, leasing, and licensing for use
  • Communications
  • Contracting (prime, owner builders, and speculative builders)
  • Hotels
  • Job printing
  • MRRA amount (maintenance, repair, replacement, and alteration)
  • Manufactured buildings
  • Publication
  • Rental leasing, licensing for use of tangible personal property
  • Restaurant and bars
  • Retail sales
  • Retail sales of food for home consumption
  • Timbering and other extraction
  • Transporting
  • Utilities

Chino Valley reduced the TPT from 4% to 2% for manufactured buildings.


Nogales imposed a new 2% tax on wastewater utility services.

In addition to these rate changes, the mandatory electronic funds transfer (EFT) threshold for businesses changed as of July 1, 2017. Taxpayers with an annual TPT liability of at least $20,000 are now required to pay by EFT. Additional information is available from the Arizona Department of Revenue. For more details regarding local rate changes in Arizona, click here.


Two local tax rate changes take effect in Arizona on November 1, 2016.

Globe. The local transaction privilege tax (TPT) rate for the following business classes in Globe increases from 2.00% to 2.30%:

  • Advertising
  • Amusement
  • Contracting – prime
  • Contracting – speculative builders
  • Contracting – owner builders
  • Job printing
  • Manufactured builders
  • Timbering and other extraction
  • Publication
  • Hotels
  • Rental, leasing, & licensing for use of TPP
  • Restaurant and bars
  • Retail sales
  • Retail sales food for home consumption
  • MRRA amount
  • Communications
  • Transporting
  • Utilities

Jerome. The transient lodging tax rate increases from 2% to 3%. In addition, the city no longer allows an exemption from the commercial rental tax, resulting in a new 3.5% tax on commercial rental, leasing, and licensing for use. Additional information.


Effective October 1, 2016 the following rate increases take effect in South Tucson:

  • Advertising: from 4.5% to 5.5%
  • Amusements: from 4.5% to 5.5%
  • Contracting – prime: from 4.5% to 5.5%
  • Contracting – speculative builders: from 4.5% to 5.5%
  • Contracting – owner builders: from 4.5% to 5.5%
  • Hotel/motel additional tax: from 1.5% to 2%
  • Hotel: from 2.5% to 3.5%
  • Job printing: from 4.5% to 5.5%
  • Manufactured buildings Job printing: from 4.5% to 5.5%
  • Publication Job printing: from 4.5% to 5.5%
  • Rental, leasing & licensing for use of TPP: from 4.5% to 6.5%
  • Telecommunications services: from 4.5% to 5%
  • Transporting: from 4.5% to 5%
  • Utility services: from 4.5% to 5%

In addition, a new commercial lease tax of 4% takes effect October 1.


Beginning September 1, 2016, the Town of Gila Bend is repealing the tiered structure of use tax and eliminating the following business classes/codes:

  • Use tax purchases (gross receipts < $500,000)
  • Use tax purchases (gross receipts > $500,000)

In Parker, the rate for residential rental, leasing, and licensing for use is 2%. See the August 2016 rate table for additional rates and business codes.


Several local transaction privilege tax (TPT) rate changes are scheduled to take effect in Arizona on July 1, 2016.

The tax rate in Gila Bend will increase from 3% to 3.5% for the following business classifications:

  • Amusement
  • Contracting – Owner Builders
  • Contracting – Prime
  • Contracting – Speculative Builders
  • Feed at Wholesale
  • Hotels
  • Job Printing
  • Manufactured Buildings
  • MRRA Amount
  • Publication
  • Rental, Leasing and Licensing for use of tangible personal property
  • Restaurant and Bars
  • Retail Sales
  • Retail Sales, food for home consumption
  • Timbering and Other Extraction
  • Transporting
  • Utilities

In Kingman, the sunset date for the 2.5% increased rate of transaction privilege and use tax has been extended from June 30, 2016 to December 31, 2017. Therefore, the rate remains 2.5% on July 1, 2016.

Winslow is continuing its additional 1% privilege tax for another five years, beginning July 1, 2016. It applies to most business classifications.

Additional information is available through Arizona’s Model City Tax Code.


Several tax rate changes will take effect in April in Arizona. Arizona imposes transaction privilege tax (TPT), which is similar to sales and use tax.

The City of Eloy is increasing the tax rate for retail sales of food for human consumption from 0% to 2%.

The Town of Wickenburg is increasing the tax rate for the following business classifications from 2.2% to 3.5%:

  • Construction Contracting – Prime
  • Construction Contracting – Speculative builders
  • Construction Contracting – Owner builders

See the Model City Tax Code for region and business codes.


The state of Arizona is working hard to simplify tax compliance for taxpayers. Whenever possible, local rate changes are being announced well ahead of the date of change. To wit: Transaction privilege tax rates for many business classifications in Colorado City will increase effective March 1, 2016.

Increasing from 2% to 3%:

  • Advertising
  • Retail sales
  • MRRA Amount

Increasing from 2% to 7%:

  • Amusement
  • Hotels
  • Hotel/Motel (Additional tax)
  • Restaurant and bars
  • Communications

No change (remains 2%):

  • Contracting prime
  • Contracting speculative builders
  • Contracting owner builders
  • Job printing
  • Manufactured buildings
  • Timbering and other extraction
  • Publication
  • Residential rental, leasing and licensing for use
  • Rental occupancy
  • Rental, leasing and licensing for use of tangible personal property
  • Transporting
  • Utilities
  • Use tax purchases
  • Use tax from inventory

No change (remains 0.10%):

  • Severance metal mining

Additional information, including region and business classification codes, is available at the Model City Tax Code.


Local transaction privilege tax (TPT) changes have been announced for Arizona. They take effect January 1, 2016.

Apache Junction

  • The sunset date of the 0.2% TPT rate increase is extended until September 1, 2026.
  • A use tax is adopted, with a rate of 2.4%.
  • A two-tier tax rate is enacted for any single item of tangible personal property with a sales price exceeding $2,000. The first $2,000 is taxed at 2.4%; any amount above that is taxed at 1.4%.

Marana

New agricultural machinery and equipment is added to the list of income producing capital equipment.

Phoenix

The tax rate on the following transactions is increased from 2% to 2.3%:

  • Amusements, exhibitions, and similar activities
  • Construction contracting – Construction contractors
  • Construction contracting – Speculative builders
  • Construction contracting – Owner-builders who are not speculative builders
  • Job printing
  • Manufactured buildings
  • Timbering and other extraction
  • Publishing and periodical distribution
  • Rental occupancy
  • Hotels
  • Rental, leasing, and licensing for use of real property
  • Rental, leasing, and licensing for use of tangible personal property
  • Restaurants and bars
  • Retail sales – Measure of tax; burden of proof; exclusions
  • Transporting for hire
  • Use tax; imposition of tax; presumption

In addition, Phoenix is adopting a two-tier tax rate for any single item of tangible personal property with a sales price exceeding $10,000. The first $10,000 is taxed at a rate of 2.3%; any amount above that is taxed at 2%.

In addition to the above changes, there are changes to TPT in Sedona, Prescott ValleyGilbert and Winslow.


Connect with Avalara
Explore

See how easily our solutions work with your business applications.

Call

Curious how we help with your specific tax challenges? Just ask.

Chat

Get direct help with your most pressing questions about tax software.