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Arizona Practice and Procedure

Arizona does not impose a sales tax. It imposes a transaction privilege tax on the seller for the privilege of doing business, and that distinction changes who bears the exposure, how exemptions are claimed, and why the cities, taxing under their own Model City Tax Code, do not always follow the state's rules. This hub collects the questions that recur for businesses operating in the state.

2Arizona articles Search within Arizona

Income and franchise tax1 Sales and use tax1

Income and franchise tax

1 article

When does an Arizona start-up subsidiary owe Arizona income tax, and should it make the multistate service provider election?A separately filing Arizona subsidiary owes at least $50 a year; the multistate service provider election needs over 85 percent of service sales out of state.Law as of Oct 15, 2026

Sales and use tax

1 article

Does Arizona's transaction privilege tax exempt machinery and equipment used in manufacturing?Yes, within limits: Arizona allows a transaction privilege tax deduction for machinery or equipment used directly in manufacturing (Ariz. Rev. Stat. 42-5061).Law as of Sep 28, 2026