Arizona sales tax is a tax on most goods and some services that you pay at the register

When you buy something in Arizona, you pay a state sales tax of 5.6 percent on top of the price. Most counties and cities add their own local sales tax on top of that, so your total rate depends on where you shop. A purchase that costs $100 before tax might cost $107 to $109 depending on your location. The tax is collected by the business at the point of sale and sent to the state and local governments.

Not everything is taxed the same way. Groceries for home cooking are not taxed, but prepared food and restaurant meals are. Prescription medications are not taxed, but over-the-counter drugs and vitamins are. Clothing and shoes are taxed. Understanding which items are taxed and which are not can help you budget more accurately.

Key Takeaways

  • Arizona's state sales tax rate is 5.6 percent, but your total rate is higher because counties and cities add local taxes on top.
  • Groceries, prescription medications, and some medical equipment are exempt from sales tax, while restaurant meals, prepared foods, and over-the-counter drugs are taxed.
  • Your total sales tax rate ranges from about 7.25 percent to over 10 percent depending on which county and city you live in.
  • Online purchases from out-of-state sellers may or may not be taxed depending on whether the seller has a physical presence in Arizona.

State and local sales tax rates vary by location

The 5.6 percent state rate is the floor. On top of that, each county adds its own rate, and then cities and towns add theirs. Maricopa County adds 0.7 percent, Pima County adds 0.8 percent, and other counties vary. Within those counties, individual cities add more. Phoenix adds 2.3 percent on top of the state and county rates, bringing the total to about 8.6 percent. Tucson adds 2.0 percent, for a total of about 8.4 percent. A small town in a rural county might have a total rate of 7.25 percent.

You can find your exact local rate by entering your address on the Arizona Department of Revenue website or by asking a cashier. The rate you see on a receipt is the combined state, county, and city rate for that specific location. If you shop in different cities or counties, you will see different totals on your receipt.

What is and is not taxed in Arizona

Food you buy at a grocery store to cook at home is not taxed. This includes meat, produce, dairy, bread, and canned goods. However, food you buy ready to eat—at a restaurant, a deli counter, a food truck, or a bakery—is taxed. A sandwich you make at home is not taxed; a sandwich you buy prepared is taxed.

Medications prescribed by a doctor are not taxed. Over-the-counter medications like pain relievers, cold medicine, and vitamins are taxed. Medical equipment like wheelchairs, crutches, and glucose monitors is not taxed if you have a prescription, but some items may be taxed depending on how they are classified.

Clothing and shoes are taxed. Books are not taxed. Newspapers and magazines are not taxed. Gasoline is taxed, but the tax is built into the price per gallon rather than added at the pump. Utilities like electricity and water are not subject to sales tax, though you may pay other fees.

How sales tax is collected and where it goes

The business where you shop collects the sales tax from you at the register and holds it temporarily. The business then sends that money to the Arizona Department of Revenue, usually monthly or quarterly depending on the business size. The state keeps the 5.6 percent state portion and distributes the local portions to the appropriate county and city.

The money goes into different government budgets. The state portion funds state services. County portions fund county services like the sheriff's office and county courts. City portions fund city services like police, fire, and street maintenance. Some local tax increases are voter-approved for specific purposes, like a school district tax or a transportation project.

Sales tax on online and out-of-state purchases

If you buy something online from a company that has a warehouse, office, or other physical location in Arizona, you pay Arizona sales tax. If you buy from a company with no physical presence in Arizona, you typically do not pay Arizona sales tax at checkout. However, you may owe use tax on that purchase when you file your state income tax return—though most individual shoppers do not report this.

Some large online retailers like Amazon now collect Arizona sales tax on all orders shipped to Arizona addresses, even if they have no physical location in the state. This is because of federal rules that changed in 2018. Smaller sellers may not collect it. The safest assumption is that if a major retailer is collecting tax, they are required to do so in your location.

Sales tax on vehicles and large purchases

When you buy a car in Arizona, you pay sales tax on the purchase price. The tax is calculated and collected by the dealer or private seller, and you pay it when you register the vehicle with the Arizona Department of Transportation. If you buy a used car from a private seller, you still owe sales tax on the sale price, and you pay it at registration.

The same rule applies to other large purchases like boats, motorcycles, and recreational vehicles. The tax is based on the purchase price, not the value of any trade-in. If you trade in a vehicle, the tax is calculated on the difference between the new vehicle price and the trade-in value, not on the full new price.

Resale certificates and business purchases

If you own a business and buy goods that you will resell, you do not pay sales tax on those purchases. Instead, you provide the seller with a resale certificate, which is a document issued by the Arizona Department of Revenue. The seller keeps the certificate on file and does not charge you sales tax. You then collect sales tax from your customers when you sell those goods.

A resale certificate is only for goods you will resell. If you buy supplies for your business—office furniture, cleaning supplies, equipment—you pay sales tax on those purchases. The certificate is not valid for services or for items you use in your business rather than resell.

Frequently Asked Questions

Do I pay sales tax on groceries in Arizona?

No. Groceries you buy to cook at home are not taxed. This includes meat, produce, dairy, bread, frozen vegetables, and canned goods. However, prepared foods like deli items, bakery items, and restaurant meals are taxed.

What is the total sales tax rate where I live?

Your rate depends on your city and county. The state rate is 5.6 percent, but your county and city add local rates on top. You can find your exact rate by entering your address on the Arizona Department of Revenue website or by looking at a recent receipt from a store in your area.

Do I pay sales tax on prescription medications?

No. Prescription medications are not taxed. Over-the-counter medications like pain relievers, cold medicine, allergy medicine, and vitamins are taxed. The difference is whether a doctor prescribed it.

Do I owe sales tax on items I buy from out-of-state online sellers?

Usually not at checkout, unless the seller has a physical presence in Arizona. However, you may owe use tax on those purchases when you file your state income tax return, though most individual shoppers do not report this. Large retailers like Amazon now collect Arizona tax on most orders shipped to Arizona.

How much sales tax do I pay when I buy a used car?

You pay sales tax on the purchase price when you register the vehicle. If you trade in a car, the tax is calculated on the difference between the new price and the trade-in value. You pay the tax at the Arizona Department of Transportation when you register, not at the dealership.