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City of Phoenix Transit Tax Increases Sales Tax Rate

In late August, 2015, Phoenix, Arizona voters approved Proposition 104 to increase the city sales tax from .04% to .07% effective January 1, 2016 for 35 years. The current Phoenix sales tax rate (or transaction privilege tax rate) of 8.3% will rise to 8.6%. The additional revenue will be used to fund existing bus service, additional light rail routes and improvement of street infrastructures among other projects.

Also beginning January 1, 2016, the Arizona Department of Revenue will be the point of administration and collection of all State, county and municipal transaction privilege taxes. One return will be filed for cities and municipalities that are currently filed separately. These cities include Phoenix, Apache Junction, Avondale, Chandler, Douglas, Flagstaff, Glendale, Mesa, Nogales, Peoria, Prescott, Scottsdale, Sedona, Tempe and Tucson. This is part of The Arizona Department of Revenue’s TPT Simplification program.

Further information on the TPT Simplification can be found in the Henry & Horne LLP blog or at the Arizona Department of Revenue’s website.

By Lisa Smith, EA

Comments

  1. MARGIE GILES says:

    What are the rules for the new transit tax on vehicles? There seems to be a lot of confusion in the industry. Some think that, for instance, a $20,000 vehicle would be taxed 8.6% for the first $10k and 8.3% for the second $10k. Other opinions are that anything over $10k would be exempt from the new transit tax altogether.

    • admin says:

      Margie –

      Thank you for your question and interest in our blog. Ordinance G-6073 amending the Phoenix City Code Chapter 14, Sec. 14-610(e) states that the 2.3% shall apply to the first $10,000.00 and the amount greater than $10,000.00 will be taxed at a rate of 2.0%. For more information see the link to the City of Phoenix ordinance page 9. https://www.phoenix.gov/financesite/Documents/Ord%20G6073.pdf

      Lisa H. Smith, EA