Arizona Sales Tax
In addition to the state income tax, Arizona also has a sales tax. This tax is levied on a variety of products and services, including cigarettes, cigars, and gasoline.
Arizona’s state sales tax, also known as the transaction privilege tax (TPT), is currently at 5.6%. Arizona sales tax rate is 5.6%, but it can be much higher when combined with district and county rates. Additionally, certain items are exempt from sales tax, including groceries, medical devices, and prescription medicine. Other exempt items include residential utilities and rent, and purchases made by nonprofit and charitable organizations. The AZ Department of Revenue provides a sales tax lookup tool to help businesses calculate the correct rate for each address.
Arizona’s sales tax is a state and local gross receipts tax that taxes tangible personal property sold at retail. It also taxes services and some rental income. In addition, it has a capital gains exemption and an unemployment insurance fund. However, you must pay the federal income tax on any capital gains you earn in Arizona.
Most goods and services in the state are subject to sales tax. Some notable exceptions include amusements, contracting, severance (metal mining), job printing and publishing, transportation, and nonmetal mining equipment. Also excluded are services that result in a finished product, such as custom manufacturing and software development.
Arizona Business Registration
In order to collect sales tax in the state of Arizona, you must register your business with the state Department of revenue and obtain a transaction privilege tax (TPT) permit. You must also file a return on time to avoid penalties. The frequency of filing is determined by your total TPT liability and can be either monthly or quarterly. Businesses with large sales volumes may be asked to file more frequently.
Arizona Sales Tax Exemption
In addition to the state income tax, Arizona also has a sales tax. This tax is levied on a variety of products and services, including cigarettes, cigars, and gasoline. Depending on your income, you may be required to pay a significant amount of this tax. To help you determine how much you should expect to pay, use the Arizona state tax calculator.
Generally speaking, sales tax in Arizona is not applicable to groceries or unprepared foods. However, some exceptions exist, such as prescription medicines and certain types of agricultural equipment and crops. Similarly, software as a service (SaaS) that is downloaded or accessed over the internet is taxable in Arizona if it’s used in the state.
It is important to note that Arizona is a destination-based sales tax state, meaning that sales tax is collected on the basis of the buyer’s location. Because of this, your company must keep accurate and up-to-date records of sales. Using bookkeeping software or enlisting the services of a professional is an excellent way to avoid errors and ensure that your Arizona sales taxes are filed correctly.
Arizona Sales Tax Due Dates
Arizona follows federal due dates for personal income tax, which means it has the same filing deadline as the rest of the country. However, it has its own rules for sales taxes. In addition to a standard sales tax rate, Arizona has a transaction privilege (sales) tax and a state business excise tax.
The AZDOR assigns a filing frequency for businesses based on their anticipated taxable sales. This frequency may be monthly, quarterly, or annually. Businesses must file and pay any TPT they owe by the assigned due date or face a penalty.
TPT returns report the total amount of taxable sales for the reporting period, along with any applicable sales and use taxes. TPT returns are due by the first business day of the month following the end of the calendar year.
