Deduction Codes

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Transaction privilege tax deduction codes are used in Schedule A of Forms TPT-2 and TPT-EZ to deduct income exempt or excluded from tax, as authorized by Arizona statute and/or the Model City Tax Code. The same region codes used in reporting income are used in Schedule A to claim deductions of nontaxable or exempt income.

For instance, a pharmacy’s income from sales of prescription drugs is specifically exempt from both state and city transaction privilege tax. The pharmacy will report all of its gross income under each correct region code and deduct the income from sales of prescription drugs on Schedule A. Appropriate taxes will then be paid on all of the pharmacy’s income not deducted on Schedule A.

 

TPT Deduction Code Listings

 

TPT deduction code listings provide the deduction code number, a description (often abbreviated) and the business codes for state and city business categories. A deduction code can often be used under both state and city business codes, but some deductions apply only to state business codes and some apply only to city business codes.

Due to the creation of economic nexus rules effective October 1, 2019, all cities were required to adopt the majority of the state’s retail provisions. These statutory changes required a change to certain deduction codes.  However, certain taxpayers may require access to both the old and the new deduction code lists.  For example, amending or filing a return for a period prior to October 1, 2019.

This statutory change also created the filing requirements for marketplace facilitators and remote sellers. We have created a separate deduction code listing for this group as a convenience.

 

All State and City Deduction Codes

  • Deduction Codes for all business classifications for filing periods AFTER October 1, 2019 (Download PDF) 
  • Deduction Codes for all business classifications for filing periods BEFORE October 1, 2019 (Download PDF)
  • Deduction Codes for marketplace facilitators and remote sellers (Download PDF)
    Please note: these deduction codes are for marketplace facilitators and remote sellers under the retail classification and are also available in the Deduction Codes document above. This separate document is provided for convenience.

 

City Deduction Code Changes

The cities were required to adopt the state retail provisions but were allowed to continue to tax certain types of transactions, which were otherwise exempted by the state.  This document outlines those deduction codes affected.

  • Listing of All Retail City Deductions Code Changes Effective October 2019 (Download PDF)