Transaction Privilege Tax
Although commonly referred to as a sales tax, the Arizona transaction privilege tax (TPT) is actually a tax on a vendor for the privilege of doing business in the state. Various business activities are subject to transaction privilege tax and must be licensed.
If a business is selling a product or engaging in a service subject to TPT, a license from the Arizona Department of Revenue (ADOR) would likely be needed as well as a transaction privilege tax or business/occupational license from the city or cities in which the business is based and/or operates.
ADOR collects the tax for the counties and cities; however, tax rates vary depending on the type of business activity, the city and the county.
Please note that businesses with multiple locations or business lines can opt to license and report for each location separately or have a consolidated license (and report aggregate sales). The cost for each license per location is $12.
TPT and Use Tax:
Individuals are subject to use tax when a retailer does not collect tax for tangible personal property used, stored or consumed.
Those individuals and businesses subject to use tax include the following:
- An out-of-state retailer or utility business making sales of tangible personal property to Arizona purchasers.
- Arizona residents who purchase goods using a resale certificate, and the goods are used, stored or consumed in Arizona contrary to the purpose stated on the certificate.
- Arizona residents who purchase goods in which another state’s sale tax or other excise tax was imposed and the rate of that tax is less than Arizona’s use tax rate.
See our Reporting Guide for convenient access to TPT-related guidance and resources.
What’s New with TPT?
Tax Rate Change
For tax rate changes, please visit Model City Tax Code's Rate and Code Updates and TPT Newsletters.
Residential Rental Tax Changes
A.R.S. § 42-6004 (H) has been amended to prohibit a city, town, or other taxing jurisdiction from levying a transaction privilege, sales, gross receipts, use, franchise or other similar tax or fee, however denominated, on the business of renting or leasing real property for residential purposes. (Lodging spaces rented for 30 days or more). Currently, there is no state transaction privilege (TPT) or county tax imposed on residential rentals. Therefore, Arizona cities will not be able to impose a tax on residential rentals from and after December 31, 2024. The Arizona Department of Revenue (ADOR) will be issuing guidance on this when available.
Arizona Business One Stop is an online portal that provides a single online location with personalized tools to plan, start, grow, move and close businesses in Arizona. It is a secure digital experience that does not require in-person interaction.
Arizona-based businesses should visit Business One Stop (B1S) if forming their business for the first time. Please note: New Business One Stop TPT licenses submissions will direct you to pay at AZTaxes.gov. TPT filings, payments, and renewals are only available at AZTaxes.gov at this time.
Businesses needing updated information on transaction privilege tax can access ADOR’s monthly newsletter, TPT Tax Rate Table and Model City Tax Code changes here by clicking on the appropriate month and year. For older information, please visit our archives.
Businesses can also subscribe to ADOR’s TPT newsletter and get updates through email or text alerts. They can receive notices regarding TPT due dates, city tax rate changes, license renewals and new features on AZTaxes.gov.