Get AZ Transaction Privilege (Sales) and Use Tax Return

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.

Services in Arizona are generally not taxable. But watch out if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products. Tangible products are taxable in Arizona , with a few exceptions.

Under Arizona's statutory sales tax structure, prime contractors are liable for sales tax on their gross contracting receipts minus the standard 35% labor deduction. Subcontractors, if they can establish that they were working for a taxable prime contractor, will be exempt from the sales tax.

Traditional Goods or Services Purchases of physical property, like furniture, home appliances, and motor vehicles, are subject to sales tax in Arizona. Arizona does not charge sales tax on the purchase of groceries, prescription medicine or gasoline.

If you run service contracts on goods sold, or if you service tangible goods as part of your sales to customers, you may be liable to collect sales tax. ... Generally, tax is due on the entire amount charged for a taxable service, including items such as labor, materials and mileage charges, even if separately stated.

Arizona taxes landscaping, but it does not tax lawn maintenance services.

Sales Tax Exemptions in Arizona Some examples of exceptions to the sales tax are certain types of groceries, some medical devices, certain prescription medications, and any machinery and chemicals which are used in research and development.

In general, nonprofit organizations in Arizona are not exempt from the Transaction Privilege and Use Tax passed on by vendors. However, as vendors themselves, nonprofits in Arizona are generally exempt from the transaction privilege tax for retail sales.

The tax applied to foods for home consumption, such as fruits, vegetables, dairy, milk, bread, uncooked meats and other unprepared foods. Hot and prepared foods are levied at the normal 8.3 percent sales-tax rate, which includes state and county taxes.

Arizona Revised Statutes (A.R.S.) § 43-1201(A) states that organizations that are exempt from federal income tax under Internal Revenue Code (IRC) § 501 are exempt from the corporate income tax imposed under Title 43 of the Arizona Revised Statutes. ... These organizations may file Arizona Form 99.

Several states tax gross business receipts, while the state of Arizona levies a very similar "transaction privilege tax" on the gross receipts of certain businesses.

The combined sales tax rate for Phoenix, AZ is 8.6%. This is the total of state, county and city sales tax rates. The Arizona state sales tax rate is currently 5.6%. The Maricopa County sales tax rate is 0.7%.

Single taxpayers now will pay 3.34% on earnings between $26,501 and $53,000, down slightly from 3.36% before. Couples now pay 3.34% on earnings between $53,001 and $106,000. Single taxpayers now pay 4.17% on income between $53,001 and $159,000, down from 4.24% before.

Under Arizona's statutory sales tax structure, prime contractors are liable for sales tax on their gross contracting receipts minus the standard 35% labor deduction. Subcontractors, if they can establish that they were working for a taxable prime contractor, will be exempt from the sales tax.

Arizona does not charge a state renewal fee. For a new TPT license issued by ADOR, the cost is $12 plus applicable city fees of up to $50 per jurisdiction. For more information, visit Renewing a TPT License.