Arizona sales tax on invoices (2026 guide)

Arizona doesn't have a sales tax in the usual sense. It has a transaction privilege tax (TPT) — a tax on the seller for the privilege of doing business in the state. The state rate for retail sales is 5.6%, and counties and cities add their own taxes on top.

The difference matters for your invoices. The Arizona Department of Revenue (ADOR) explains that TPT is levied on the seller's income, and the seller is legally allowed to pass the cost on to the buyer — but the seller remains liable for the tax either way. This guide covers rates, licensing, how to show TPT on an invoice and what to do when a customer buys for resale.

Arizona TPT rates

The 5% base rate comes from A.R.S. 42-5010, and an additional 0.6% increment under A.R.S. 42-5010.01 applies from July 1, 2021 through June 30, 2041. A few classifications have different state rates — for example, transient lodging is taxed at 5.5%.

Cities and towns levy their own TPT, and ADOR administers it. ADOR's Model City Tax Code site covers the cities and towns that participate in ADOR's tax system, and its rate tables list state, county and city rates by business classification. City rates change from time to time, so check the current table before you set up your invoices.

Is what you sell taxable in Arizona?

TPT applies to specific business classifications, not to every sale. The state classifications include retail, restaurant, personal property rental, amusement, prime contracting, job printing, publication, transporting, utilities and telecommunications, among others.

For freelancers and small businesses:

• Selling goods at retail is taxable under the retail classification.
• Professional and personal services that involve tangible property only as an inconsequential element are excluded from the retail classification. Consulting, design, writing and similar services generally aren't subject to state TPT.
• Services rendered in addition to a retail sale are excluded from the retail tax base.
• Construction contractors fall under the separate prime contracting classification, which has its own rules. Read ADOR's contracting guidance before you invoice construction work.

Cities follow the Model City Tax Code, which can differ from the state rules in places, so check the city profile for where you do business.

Getting an Arizona TPT license

You need a TPT license before you engage in a taxable business. Under A.R.S. 42-5005:

1. The state license fee is $12 and the license is valid for the calendar year. It can be renewed each year, and there's no fee to renew the state license.
2. Each city or town that imposes a privilege tax can charge a municipal license fee of up to $50, and its renewal fee is due January 1.
3. You get both through ADOR — you don't need a separate application with each city.

Remote sellers

Under A.R.S. 42-5044, a remote seller must get a TPT license and pay the tax once its Arizona retail sales (not made through a marketplace facilitator) are more than $100,000 in the previous or current calendar year. Marketplace facilitators have the same $100,000 threshold.

How TPT should appear on an Arizona invoice

Because TPT is the seller's tax, you have two options:

• Show it separately. Add a TPT line with the combined state, county and city rate. If you add a charge to cover the tax, Arizona law says you can't remit less than the amount you collected.
• Include it in your price ("factoring"). ADOR allows sellers that don't separately state the tax to factor it out when they report. Divide the taxable receipts by 1 plus the tax rate, then multiply the result by the rate.

Either way, a good Arizona invoice includes:

• your business name, address and TPT license number,
• the customer's name and address,
• a unique invoice number and the invoice date,
• each item or service with its price,
• TPT as its own line (or a note that the price includes TPT), and
• the total due.

Resale and exemption certificates

A customer buying goods to resell gives you Form 5000A, Arizona Resale Certificate. It's filled out by the buyer and kept by you — it isn't sent to ADOR. For other deductions and exemptions, customers use Form 5000, Transaction Privilege Tax Exemption Certificate, which can't be used for resale.

A.R.S. 42-5009 says you establish a deduction by both marking the invoice to show the sale was deducted from your tax base and getting a completed certificate from the buyer. So on a resale or exempt sale, add a note such as "Sale for resale — Form 5000A on file." See how to invoice a tax-exempt customer.

A worked example

You sell a custom table for $2,000 to a customer at a location where the combined state, county and city rate is 8.5% (a hypothetical rate for this example).

• Tax shown separately: $2,000 × 8.5% = $170.00 TPT, so the invoice total is $2,170.00.
• Tax factored into a flat price: if you quote $2,170 including tax, you report $2,170 ÷ 1.085 = $2,000 in taxable sales and $2,000 × 8.5% = $170.00 in tax.

Both invoices cost the customer the same, but only the first tells them how much of it is tax.

Selling to customers in other states

If you ship goods to customers in another state, that state's rules may apply instead of Arizona's. Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require out-of-state sellers to register and collect their sales tax once sales into the state pass a threshold the state sets. Check each state you sell into and use its rate on those invoices. Our sales tax calculator can help with the math.

Common mistakes on Arizona invoices

• Thinking the customer owes the tax. In Arizona the seller is liable, collected or not.
• Using only the 5.6% state rate and forgetting county and city taxes.
• Remitting less TPT than you charged on the invoice.
• Accepting Form 5000 for a resale. Resale needs Form 5000A.
• Not marking the invoice on deducted sales.

Quick checklist for Arizona invoices

• ✅ TPT license (state and city) before your first taxable sale
• ✅ Combined state, county and city rate for the right classification
• ✅ TPT shown on its own line, or factored correctly
• ✅ Resale and exempt sales marked on the invoice
• ✅ Forms 5000A and 5000 on file for those customers