Arizona Sales Tax Basics

Arizona sales tax is a tax added to the price of most goods you buy in the state. When you purchase something at a store, restaurant, or online from a seller based in Arizona, you pay the base state sales tax of 5.6 percent on top of the listed price. The total tax you actually pay is usually higher because cities and counties add their own local sales taxes on top of the state rate.

The final tax rate depends on where you are in Arizona. A purchase in Phoenix will have a different total tax than the same purchase in Tucson or a small town, because each location has its own local tax rate. This means the same item costs different amounts depending on the city where you buy it.

Sales tax is collected by the business at the point of sale and sent to the state and local governments. You do not file anything yourself or pay sales tax separately — it is added to your receipt total when you check out.

Key Takeaways

  • Arizona's base state sales tax is 5.6 percent, but your actual rate is higher because your city or county adds local tax on top.
  • The total sales tax rate varies by location within Arizona, ranging from around 7.6 percent to over 10 percent depending on the city.
  • Sales tax applies to most goods and some services, but groceries, prescription medications, and certain medical equipment are exempt.
  • Online purchases from Arizona-based sellers are subject to sales tax, while purchases from out-of-state sellers may or may not be taxed depending on that seller's location and size.

State and Local Tax Rates

The 5.6 percent state rate is the floor. On top of that, your city or county adds its own rate. In Phoenix, the city adds 2.3 percent, bringing the total to 8.6 percent before any special district taxes. In Tucson, the city adds 2.35 percent, for a total of 7.95 percent. Smaller towns and rural areas often have lower local rates, sometimes bringing the total to around 7.6 percent.

Some areas also have special district taxes for transit, sports facilities, or other local projects. These can add another 0.5 to 1 percent to your total. The easiest way to find your exact rate is to look at a recent receipt from a purchase in your area, or to search "sales tax rate" plus your city name online.

The rates change occasionally when cities or counties vote to adjust them, so the rate you paid last year may not be the rate you pay this year. State and local governments publish updated rates, but the simplest check is to look at what you actually paid on a recent purchase.

What Is and Is Not Taxed

Most physical goods are taxed — clothing, electronics, furniture, household items, and almost anything you buy at a store. Restaurants and prepared food are taxed. Gasoline is taxed. However, some important categories are exempt.

Groceries — unprepared food you cook at home — are not taxed in Arizona. This includes meat, vegetables, bread, milk, and canned goods. The rule is whether the food is ready to eat. If you buy a rotisserie chicken from a grocery store deli, that is taxed as prepared food. If you buy a raw chicken to cook at home, it is not taxed.

Prescription medications are not taxed. Over-the-counter medicines like aspirin or cold medicine are taxed as regular goods. Medical equipment prescribed by a doctor — such as wheelchairs, hearing aids, or diabetic supplies — is typically exempt, though the rules can be specific about what qualifies.

Services are usually not taxed, with some exceptions. A haircut is not taxed. Car repair is not taxed. However, certain services like hotel rooms, car rentals, and admission to entertainment venues are taxed.

Sales Tax on Online Purchases

If you buy something online from an Arizona-based business, sales tax is added to your order. The seller collects it and sends it to the state and local government where the item is shipped.

If you buy from an out-of-state seller, whether you pay sales tax depends on whether that seller has a physical presence or significant sales activity in Arizona. Large retailers like Amazon, Walmart, and Target collect Arizona sales tax on orders shipped to Arizona addresses because they have warehouses or operations in the state. Smaller out-of-state sellers may not collect Arizona tax, in which case you technically owe the tax yourself, though this is rarely enforced for individual purchases.

The rule changed in 2018 when the U.S. Supreme Court decided that states could require online sellers to collect sales tax even without a physical store in that state. Most major online retailers now collect it automatically, so you will see the tax added at checkout.

Who Collects and Where the Money Goes

The business you buy from — the store, restaurant, or online seller — collects the sales tax from you and holds it temporarily. That business then sends the tax to the Arizona Department of Revenue, which splits it between the state and the local city or county where the purchase happened.

The state keeps the 5.6 percent state portion. The city or county keeps its local portion. Special district taxes go to the district that imposed them. This is why sales tax rates vary so much by location — each city and county decides how much local tax to add, and that money stays local.

Businesses are required to file sales tax returns with the state, usually monthly or quarterly depending on how much tax they collect. If a business fails to send in the tax it collected, the state can pursue them for the unpaid amount.

Sales Tax on Specific Purchases

Vehicle purchases are subject to sales tax in Arizona. When you buy a car, truck, or motorcycle from a dealer or private seller, you owe sales tax on the purchase price. The tax is calculated at the rate of your county or city. You pay this tax when you register the vehicle with the Arizona Department of Transportation.

Alcohol and tobacco are taxed at the regular sales tax rate, plus they have additional state excise taxes. Beer, wine, and spirits all have their own per-unit taxes on top of sales tax. Cigarettes and vaping products have excise taxes as well. These add significantly to the final price.

Utilities like electricity, natural gas, and water are not subject to sales tax in Arizona. However, some cities add a separate utility tax that appears on your bill. This is different from sales tax but serves a similar purpose.

How Sales Tax Affects Your Budget

Sales tax is a hidden cost that many people forget to account for when budgeting. If something is priced at $100 and your total sales tax rate is 8.6 percent, you will actually pay $108.60. Over time, this adds up significantly, especially on large purchases like appliances or furniture.

When comparing prices between Arizona locations, remember that the same item may cost different amounts depending on the local tax rate. A purchase in a low-tax area will be cheaper than the same purchase in a high-tax area, even if the store price is identical.

For businesses, sales tax is a major accounting responsibility. They must track what is taxable and what is not, file returns on time, and keep records in case of an audit. Mistakes can result in penalties and interest.

Frequently Asked Questions

What is the total sales tax rate where I live in Arizona?

Your rate depends on your city and county. The state base is 5.6 percent, but your city or county adds local tax on top. Look at a recent receipt to see your actual total rate, or search online for "[your city] sales tax rate" to find the current number.

Do I have to pay sales tax on groceries?

No. Unprepared food you buy to cook at home — meat, vegetables, bread, milk, canned goods — is not taxed. Prepared food like restaurant meals, deli items, and ready-to-eat items are taxed as regular purchases.

Is sales tax added to online orders shipped to Arizona?

It depends on the seller. Large retailers like Amazon and Walmart collect Arizona sales tax automatically. Smaller out-of-state sellers may not, though you technically owe the tax yourself in those cases. Most major online sellers now collect it at checkout.

Why do different Arizona cities have different sales tax rates?

Each city and county decides how much local tax to add on top of the state rate. The state keeps 5.6 percent, but Phoenix, Tucson, and smaller towns each set their own local rate. This is why the same purchase costs different amounts in different cities.

Are prescription medications taxed in Arizona?

No. Prescription medications are exempt from sales tax. Over-the-counter medicines like aspirin or cold medicine are taxed as regular goods. Medical equipment prescribed by a doctor is usually exempt, but the rules can be specific about what qualifies.