Sales Tax

Sales Tax in Arizona: Complete Guide 2026

Updated 2026-03-10

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Sales Tax in Arizona: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Arizona does not technically have a “sales tax” — instead, it imposes a Transaction Privilege Tax (TPT), which is a tax on the privilege of doing business in the state. While functionally similar to a sales tax from the consumer’s perspective, the TPT is legally imposed on the seller rather than the buyer. The state TPT rate is ~5.60%, and when city and county taxes are added, combined rates can range from approximately ~5.60% to ~11.10%, with an average combined rate of approximately ~8.40%.

Arizona TPT / Sales Tax Rates (2026)

ComponentRate
State TPT rate~5.60%
Average combined rate~8.40%
Lowest combined rate~5.60% (unincorporated areas with no local tax)
Highest combined rate~11.10% (select jurisdictions)

Combined Rates in Major Arizona Cities

CityEstimated Combined Rate
Phoenix~8.60%
Tucson~8.70%
Mesa~7.80%
Scottsdale~8.05%
Chandler~7.80%
Glendale~9.20%
Tempe~8.10%
Gilbert~7.80%
Peoria~8.10%
Flagstaff~9.18%

Rates vary significantly between cities. Glendale and Flagstaff have notably higher rates due to local surtaxes, while Gilbert, Chandler, and Mesa are on the lower end.

How Arizona’s TPT Works

Transaction Privilege Tax vs. Sales Tax

Unlike conventional sales taxes, the TPT is a tax on the vendor for the privilege of conducting business. In practice, most businesses pass this cost to customers, so it functions like a sales tax. However, the legal distinction has implications:

  • The vendor is the taxpayer, not the consumer
  • Different business activities may be taxed at different rates
  • Some activities subject to TPT (like contracting) are structured differently than retail sales

City and County Components

Arizona cities are authorized to impose their own TPT rates, which are separately administered:

ComponentRate Range
State TPT~5.60%
County excise tax~0.50% to ~1.125%
City privilege tax~0.00% to ~4.50%
Combined~5.60% to ~11.10%

Prior to 2023, Arizona cities each had their own TPT license and filing requirements. The state has consolidated administration through the Arizona Department of Revenue’s TPT filing portal, simplifying compliance.

Online and Remote Sales

Arizona requires marketplace facilitators and remote sellers exceeding $100,000 in Arizona sales to collect and remit TPT. The rate is based on the buyer’s delivery address.

Taxable vs. Exempt Items

Exempt from Arizona TPT

  • Food for home consumption (groceries) — exempt from the ~5.60% state TPT; however, some cities impose their own tax on food
  • Prescription medications
  • Medical devices prescribed by a physician
  • Sales for resale with a valid TPT exemption certificate
  • Machinery and equipment used directly in manufacturing (partial exemption)

Important Note on Groceries: Arizona exempts groceries from the state ~5.60% TPT, but individual cities may impose their local TPT on food. The result varies by city — some cities exempt food, while others tax it at the local rate. Consumers should check their specific city’s policy.

Taxable Items

  • Prepared food and beverages (restaurant meals, heated food)
  • Clothing and footwear (fully taxable)
  • Electronics, furniture, appliances
  • Vehicles (subject to a separate ~$25 per $100 vehicle license tax at purchase, plus TPT)
  • Alcohol and tobacco (plus excise taxes)
  • Lodging (hotel/motel rooms subject to TPT plus potential tourism taxes)

Comparison to Neighboring States

StateState RateAvg. Combined RateIncome Tax?Grocery Tax
Arizona~5.60%~8.40%Yes (flat ~2.50%)State exempt / city varies
California~7.25%~8.68%YesExempt
Nevada~6.85%~8.23%NoExempt
New Mexico~5.00%~7.72%YesExempt
Utah~6.10%~7.19%Yes (flat ~4.65%)Taxable (reduced)
Colorado~2.90%~7.77%Yes (flat ~4.40%)Exempt
National Avg.~5.09%~6.60%Most statesVaries

Arizona’s average combined rate is above the national average. Nevada, with no income tax and a slightly lower combined sales tax rate, is a competitive alternative for residents near the border.

Tips for Minimizing Arizona Sales Tax (TPT)

  1. Check your city’s food tax policy. Since grocery taxation varies by city, shopping in a city that exempts food from local TPT can save approximately ~2.00% to ~3.00% on your grocery bill.

  2. Consider lower-rate cities for major purchases. Shopping in Mesa or Gilbert (~7.80%) versus Glendale (~9.20%) can save approximately ~$14 per $1,000 spent on taxable goods.

  3. Understand the contracting TPT. Home improvement and construction in Arizona are subject to a separate contracting TPT classification. Rates and rules differ from retail, so get quotes that clarify tax treatment.

  4. Cross-border shopping opportunities. Residents near the Nevada or New Mexico borders may find lower combined rates for certain purchases in those states.

  5. Leverage the manufacturing exemption. Arizona provides partial TPT exemptions for machinery and equipment used directly in manufacturing, which can significantly reduce costs for qualifying businesses.

  6. File use tax on untaxed out-of-state purchases. If you purchase goods from out-of-state sellers that do not collect Arizona TPT, you are required to report and pay use tax.

Key Takeaways

  • Arizona imposes a Transaction Privilege Tax (TPT) rather than a traditional sales tax, though the effect on consumers is similar
  • The state rate is ~5.60% with combined rates reaching approximately ~11.10% in some jurisdictions
  • Groceries are exempt from state TPT but may be taxable at the city level, depending on the municipality
  • Clothing is fully taxable at all rates
  • The consolidated TPT filing system has simplified compliance for multi-location businesses
  • Combined rates vary dramatically between cities, making shopping location relevant for major purchases

Next Steps