How 2023 Transaction Privilege Tax are calculated in Arizona

The state general transaction privilege tax rate of Arizona is 5.6%. In addition to the state-level sales tax, cities and municipalities in Arizona have the authority to levy their own transaction privilege tax rates. These local rates can add up to 5%, resulting in a combined maximum sales tax rate of 11.1% in certain regions.

Every 2023 combined rates mentioned above are the results of Arizona state rate (5.6%), the county rate (0% to 1.3%), the Arizona cities rate (0% to 5%), and in some case, special rate (0% to 1.5%).

Transaction Privilege Tax

Often mistaken for a sales tax, the Arizona Transaction Privilege Tax (TPT) is actually a tax imposed on businesses for the privilege of operating within the state. This tax applies to various business activities, and those engaging in such activities must obtain the appropriate licenses.

If a business is involved in selling goods or providing services that are subject to TPT, it will likely need a license from the Arizona Department of Revenue (ADOR). Additionally, a transaction privilege tax or business/occupational license may also be required from the city or cities where the business is located and/or conducts operations.

TPT and Use Tax

Individuals are liable for use tax when a retailer fails to collect tax on tangible personal property that is used, stored, or consumed in Arizona.

The following individuals and businesses are subject to use tax:

• Out-of-state retailers or utility companies selling tangible personal property to Arizona buyers.
• Arizona residents who purchase goods using a resale certificate, but later use, store, or consume those goods in Arizona in a manner inconsistent with the certificate's stated purpose.
• Arizona residents who buy goods on which sales tax or another excise tax was imposed by another state, provided that tax rate is lower than Arizona's use tax rate.

For comprehensive details, please refer to the official Arizona government website.

Arizona state rate(s) for 2023

Lowest possible rate: 5.6% (e.g., Phoenix, Arizona)
Other common rates: 6.1% .6.3%, 6.35%, 6.43%, 6.6%, 6.7%, 6.712%, 6.9%, 7.6%, 7.8%, 8.05%, 8.1%, 8.2%, 8.3%, 8.35%, 8.412%, 8.43%, 8.5%, 8.55%, 8.6%, 8.7%, 8.8%, 8.9%, 8.95%, 9.1%, 9.18%, 9.181%, 9.2%, 9.3%, 9.43%, 9.48%, 9.6%, 9.7%, 9.8%, 9.85%, 9.9%, 10%, 10.1%, 10.212%, 10.3%, 10.35%, 10.4%, 10.7%, 10.712%, 10.9%,
Highest possible rate: 11.1% (Tucson, Arizona)
Average combined rate across Arizona: 7.913%

Other 2023 sales tax Facts for Arizona