TPT deduction codes are used to report income that is not taxable as a result of a deduction or exclusion authorized by the Arizona Revised Statutes and/or the Model City Tax Code. The same business codes used in reporting income are used to report the deductions of nontaxable or exempt income. Each business code has its own set of deduction codes. A deduction code allowed under one business classification, may not be allowed in another.
For instance, a pharmacy’s income from sales of prescription drugs is specifically exempt from TPT under the retail classification. The pharmacy will report all of its gross income under each correct business code and deduct the income sales of prescription drugs. Appropriate taxes will then be paid on all of the pharmacy’s taxable income that was not deducted. For example, a pharmacy could have reportable income under retail classification for other items that are not deductible.
TPT deduction code listings provide the deduction code number, a description (often abbreviated) of the code and the applicable business classification to which the deduction code applies. A deduction code may only be used for the business classification(s) to which it applies. For example, a retail deduction code cannot be used in any other classification unless specifically authorized by statute. The counties piggy-back the state TPT provisions, so a deduction applicable at the state level also applies to the counties.
- Marketplace Facilitators and Remote Sellers Deduction Codes, click here.
- Statutory Authority Document are coming soon.
Please note: This document shows the full statutory text of each deduction.