Residential Rental Tax Changes Coming in the New Year

Phoenix, AZ—The Arizona Department of Revenue (ADOR) announces the elimination of transaction privilege tax (TPT) applicable to the rental of real estate for residential purposes (residential rental) as of January 1, 2025. A.R.S. § 42-6004 (H) was amended to exempt residential rental TPT from being levied. Residential rental TPT is reported and collected under business code 045 for long-term lodging stays of 30 days or more. 

Next Steps for Property Owners
Owners should continue to collect, file, and pay residential rental TPT for periods through December 31, 2024, filed in January 2025. For periods beginning January 1, 2025 and thereafter, individuals should discontinue collecting residential rental TPT.

TPT licenses that only have residential rental (business code 045) on their account have been automatically canceled effective January 1, 2025. However, property owners are still able to file for periods prior to January 1, 2025. The TPT license (residential rental only) will not be renewed for the 2025 calendar year. If the business has other business activity on the same license, instead the residential rental location will be closed. No further action or steps need to be taken to cancel the license or close the location. 

Be aware that cancelation of your license will not exempt you from any liabilities related to periods before January 1, 2025. If liabilities are unpaid, enforcement actions may be taken against you. For businesses that cannot afford to pay their tax liability in full, ADOR offers options to help make payments through Collections.

Need Assistance?
For more information on this change and to review frequently asked questions, please visit www.azdor.gov/business/residential-rental. If you need further assistance, please call our Customer Care line at (602) 255-3381.