2024 Guide to Sales Tax in Phoenix, Arizona

What is the Sales Tax in Phoenix?

Phoenix has a combined sales tax rate of 8.6%. In Arizona, the sales tax rate can be made up of three different sales tax rates:

• The Arizona state sales tax rate: 5.6%
• A Maricopa County sales tax rate: 0.7%
• The Phoenix city sales tax rate: 2.3%
• Any special sales tax rates – these are charged to fund district-wide initiatives: 0.0%

What is Maricopa County Sales Tax?

Maricopa County’s sales tax rate is also 0.7%. However, often county sales tax rates are lower than the sales tax rate charged in cities within that county. That’s because some cities might charge additional rates or be subject to a special tax rate that only applies to certain cities in that county.

In Maricopa County, the amount charged from one city to another can vary considerably due to some cities that charge a higher rate.

Tax Rates in Phoenix, Arizona

Wondering how much sales tax rates vary in Phoenix? Here’s a list of the top 10 zip codes in Phoenix and the sales tax rates they charge by zip code:

Other Tax Rates for Phoenix

We’ve now shared the main tax rates for Phoenix. Here are some other tax rates that you might have to charge in that city and state.

What Items are Taxable in Phoenix?

In Arizona, not all items are taxable. For example, in many states, prescription drugs are exempt from sales tax. The best way to ensure you’re charging taxes on the right items is to add a Tax Information Code (TIC) to all the items you’re selling so that the correct tax is charged. A TIC is a number assigned to a category of goods or services.

Here is a list of some of the things that are taxable in Phoenix:

What Items are Exempt from Taxes in Phoenix?

In Arizona, there are a number of items that are exempt from taxes. States typically make items tax exempt to encourage their purchase or because the items are essentials.

The easiest way to make sure you don’t accidentally charge sales tax on an item that’s exempt is to add a Tax Information Code (TIC) to all your items. A TIC is a number that groups similar goods or services into one category.

Here is a list of some of the things that are tax exempt in Phoenix:

Who Needs to Collect Sales Tax in Phoenix?

A business only needs to collect sales tax in Phoenix if they have either achieved physical nexus or economic sales tax nexus in Arizona.

How do you do that? By making sales to residents of Maricopa County or another city in Arizona either by having a physical presence in Arizona or doing a certain amount in sales to residents of Arizona in a year.

What is Physical Nexus in Arizona?

Physical nexus in Arizona essentially just means that your business has a physical presence of some kind in the state. This isn’t just something you qualify for if your headquarters are in the state – there are a lot of ways that out-of-state sellers can have a physical presence in Arizona despite being based elsewhere.

How you qualify for physical nexus in Arizona (full details):

• A physical location in Arizona is the easiest way to qualify for physical nexus. That could include having your headquarters, a satellite office, a warehouse, a distribution center, a showroom, or some other form of physical location.
• If you have affiliates who represent your business in certain kinds of operations in the state of Arizona, this could also mean you qualify for physical nexus.
• Have employees in the state? That could qualify you for physical nexus in Arizona.
• If you have physical property that you rent or lease to someone in Arizona, your business might also have physical nexus there.

What is Economic Nexus in Arizona?

So, what if you don’t have any physical ties to the state? In Arizona, you can have economic nexus in the state simply by making $100,000 worth of sales in the state in a year or 100 transactions.

How you qualify for economic nexus in Arizona (full details):

• You need to count all sales made by your business into Arizona, including wholesale sales, towards your $100,000 economic nexus threshold and 100 transactions.
• The only exception is that you don’t have to count sales you made through a qualifying marketplace where the marketplace facilitator is collecting taxes on your behalf.
• When you meet the threshold for economic nexus, you need to register for sales tax in Arizona immediately and begin collecting and remitting sales taxes in Arizona.

How to Get a Sales Tax Permit in Phoenix?

If you reach either physical or economic nexus, you’ll need to get a sales tax permit in Arizona for all your sales across the state, including in Phoenix. Getting your sales tax permit is easy and free.

Here are the steps:

1. Go to the Arizona Department of Revenue website.
2. Answer a few questions about your business.
3. Allow the wizard to identify what permits you need and register you for them.

That’s it!

See the State of Arizona’s Sales Tax website for more info.

How Do You Charge the Right Amount for Sales Tax in Phoenix?

Want to make sure you charge the right amount in sales tax in Phoenix? Since there are cities in Maricopa County that charge different rates, it can be complicated to ensure you always charge the right amount – especially on remote sales.

Here’s how to stay sales tax compliant:

1. Manually check and input rates: Managing your sales taxes yourself is possible since the state’s website will keep you updated on sales tax rates in cities across the state. However, there are a lot of cities in Maricopa County, let alone across the whole state. Sales tax rates also could change at various times in the year and charging the wrong amount could be a costly mistake. Checking monthly and updating your local, district, and tax rates in your ecommerce platform is necessary to make sure you’re always charging the right amount in sales tax.
2. Use a sales tax compliant software solution: Doing things manually isn’t just time-consuming but it’s also no longer necessary. There is affordable sales tax compliance software like TaxCloud that automates everything for you. Why track and update sales tax rates in every tax jurisdiction you are required to collect taxes in when you can outsource that work?

How Do You File and Remit Sales Tax in Phoenix?

Wondering if you need to file sales tax returns in the city or county of Phoenix? Thankfully, the answer is no. If you have sales tax nexus in Arizona, you can collect sales taxes from across the state and file just one state-wide return. When you remit the sales tax you collected to the State of Arizona, they’ll then remit those funds to whatever city, district, or county where those taxes were collected.