Sales Tax Guide for Arizona

If you’re an entrepreneur or e-commerce seller doing business in Arizona, staying compliant with sales tax laws is essential. Overlooking your obligations (even unintentionally) can lead to costly mistakes.

So, what do you need to know to stay on the right track?

This sales tax guide for Arizona covers everything about Arizona sales tax, also known as the Transaction Privilege Tax (TPT). You’ll learn who needs to collect it, how to register, which exemptions apply, how to file, and the best practices to keep your business compliant and audit-ready.

Let’s get started.

Arizona Sales Tax at a Glance

Sales Tax 101: The Basics for Arizona Businesses

What Is Sales Tax in Arizona?

Arizona’s “sales tax” is officially called the Transaction Privilege Tax (TPT). It’s a statewide rate of 5.6%, plus local city and county rates that can take your total rate as high as 11.2% depending on where your customer is located.

Your Role as a Seller

As a seller, you’re responsible for collecting TPT on sales of taxable goods and services, then remitting it to the Arizona Department of Revenue.

E-commerce sellers, brick-and-mortar retailers, and marketplace businesses all have compliance requirements.

Sales Tax vs. Use Tax

TPT is collected by the seller when a buyer purchases taxable items or services from a business with nexus in Arizona.

If a customer doesn’t pay TPT at the time of sale; often because the seller was out-of-state and not registered, use tax may be due from the buyer on untaxed purchases.

If your business buys items from out-of-state vendors that do not charge TPT or sales tax, you’re responsible for remitting use tax directly to the state.

Confused? doola’s experts will explain it better, schedule a demo!

Do You Need to Collect Arizona Sales Tax (TPT)?

If you’re making sales to customers in Arizona, you may need to collect TPT.

Here’s what to check:

Do you have nexus in Arizona?

Nexus means a physical or economic connection to the state.

You have economic nexus in Arizona if you make over $100,000 in gross sales into the state in a calendar year.

Physical nexus can be triggered by an office, employees, or inventory in Arizona (including Amazon FBA warehouses).

Meet the threshold? You’ve got compliance obligations.

Are you selling taxable goods or services?

Most physical products are taxable, and many digital goods, software, and some services are too. See the section below for details.

Are your buyers in Arizona? Do they owe sales tax?

If yes and you’re not collecting, it becomes your problem (not just the customer’s). Penalties add up quickly.

E-commerce example: If your Shopify shop sells $2,000 worth of gadgets to Phoenix customers, with an average combined tax rate of 8.6%, that’s $172 you’re responsible for collecting and remitting to the state.

E-Commerce Implications: What Online Sellers Should Watch Out For

• Amazon FBA: If inventory is stored in an Arizona warehouse, physical nexus is triggered. You must register and collect TPT.

• Shopify sellers: You are responsible for setting up tax collection and remitting yourself.

• Marketplace sellers (Amazon, Etsy): Marketplaces collect and remit TPT for you. However, it is your responsibility to confirm your products are configured correctly and that taxes are being paid to the state.

What Happens If You Don’t Collect It: Penalties for Non-Compliance

If you’re audited and owe back TPT, Arizona can impose penalties and interest, plus require you to pay the original tax out of pocket. Remember, no retroactively billing your buyers allowed.

Unsure about nexus? Let doola analyze it for you.

Arizona Nexus Rules: Physical, Economic & More

Here’s how e-commerce sellers trigger nexus in Arizona:

Physical Nexus Triggers

• Owning/leasing an office, warehouse, or other place of business

• Having employees or representatives in Arizona

• Inventory or stock held in Arizona fulfillment centers

Economic Nexus (Wayfair Law)

You have economic nexus if your gross sales into Arizona exceed $100,000 in the current or previous calendar year.

Marketplace Nexus

Marketplace facilitator laws in Arizona require platforms like Amazon or Etsy to collect and remit TPT on your behalf for sales made through their sites.

Still selling on your own website? You’re responsible for compliance there.

📌 doola’s Pro Tip for the Do’ers: Track your sales and inventory locations monthly on all platforms.

Arizona Sales Tax (TPT) Rates & Sourcing for E-Commerce

Calculating the right rate can be tricky, since Arizona has city and county taxes in addition to the state base rate.

2025 Rates: State, City & County Combined

In 2025, the base state Rate is 5.6%. Local taxes vary by location. Total rates range from 5.6% up to 11.2% in some cities.

View the current Arizona TPT Rate Table for location-specific rates.

• State rate: 5.6%

• City/county rates: 0%–5.6% (varies by address)

• Combined rate: 5.6%–11.2%

Arizona is a destination-based sourcing state: The combined tax rate is based on your customer’s “ship to” address, not your own business address.

Example: Sell from California to a buyer in Scottsdale, AZ. You must charge Scottsdale’s combined rate.

Marketplace Facilitator Rules

Arizona’s law requires marketplace facilitators like Amazon, Etsy, and Walmart to collect and remit TPT for third-party sellers.

However, if you also sell via your own site or outside these platforms, you must still register and collect for those direct sales.

Need rate setup help across multiple platforms? doola’s got you covered. Schedule a demo with us today.

What’s Taxable in Arizona for E-Commerce Sellers?

Most tangible personal property is taxable. That includes:

• Physical goods: Apparel, electronics, books, accessories, gifts, etc.

• Digital goods: eBooks, downloadable software/apps, digital media

• Some services: Most business and professional services are not taxed, but some (like leasing personal property, amusement, and certain installation or repair services) are subject to TPT.

If you’re selling through Shopify or Amazon, verify your product types and tax settings for every tax location.

What’s Exempt in Arizona

Arizona offers exemptions for select items and buyers, including:

• Most groceries/food for home consumption

• Prescription medications

• Certain medical devices

Some digital services, resale purchases, and nonprofit or government agency sales may also be exempt. Always collect exemption certificates!

Registering for an Arizona TPT License as an E-Commerce Seller

If you have nexus in Arizona, you must register for a TPT license (seller’s permit) before collecting sales tax.

Step 1: Confirm If You Have Nexus in Arizona

If you exceed $100,000 in annual Arizona sales, store inventory in the state (including via Amazon FBA), have a business location, or conduct other nexus-creating activities; you need to register.

Step 2: Gather Required Information

• EIN (Employer Identification Number)

• Legal business name

• Physical/mailing address

• Estimated sales in Arizona

Step 3: Register Online

Register online via the AZTaxes.gov portal. Select all cities and business codes that apply. Physical locations, remote, and online sellers must register.

Alternatively, you can submit the AZ Joint Tax Application by mail, but the online process is faster.

Want it done for you? Register stress-free with doola

Collecting Sales Tax: E-Commerce Best Practices

After registering for an Arizona TPT license, configure your sales channels correctly to collect the right local and state taxes:

Platform-specific Sales Tax Settings

• Shopify: You must set up Arizona rates and verify city/county rates for proper compliance.

• Amazon/Etsy: They collect and remit for third-party sellers, but you remain responsible for confirming products are set up and sales are reported correctly in your accounts.

• Other platforms: Confirm tax configuration for “destination-based” rates by ship-to address.

📌 doola’s Pro Tip for the Do’ers: Missed charging TPT at checkout? That tax comes out of your pocket in an audit. Double-check your platform setup!

Automate Where Possible

Multi-state sellers can automate rate collection, reporting, and compliance tasks using doola‘s solution with Hands Off Sales Tax and similar integrations for Shopify and other major platforms.

Filing and Remitting Arizona TPT for Online Sellers

Once you’ve collected Arizona TPT, you must file returns and remit the funds on time. Separate returns may be required for each city in which you do business, plus the state return.

How to File?

File online via AZTaxes.gov. You’ll report the gross sales, deductions for exempt sales, TPT collected, and breaks by location code for each place where you have nexus.

Local, county, and state portions are split on your return.

Filing Frequency

• Monthly: Most e-commerce and active retail sellers file monthly.

• Quarterly: If your state tax liability is less than $500 in previous year.

• Annually: If less than $50 due in a year.

TPT returns are due on the 20th of the month following the reporting period (or the next business day if the 20th falls on a weekend or holiday).

No Sales? Still File a Zero Return

You must still file even if you had no sales or collected no TPT for a period. Failure to file zero returns will trigger penalties.

Closing or Selling Your Business

If you close or transfer ownership of the business, file a final TPT return and officially close your account with the Arizona Department of Revenue.

Stay compliant; let doola support your filings.

Arizona Special Rules: Sales Tax Holidays & Shipping Charges

Arizona Sales Tax Holidays

Arizona does not currently offer sales tax holidays. All regular rules apply year-round for e-commerce transactions in 2025.

How Shipping & Handling Are Taxed in Arizona

Shipping charges are generally taxable in Arizona when included in the sale. This means that if you charge the customer for shipping/handling, and the item itself is taxable, the shipping portion must also have TPT applied.

If you separately itemize delivery and allow the buyer to pick up products at your location (and they do so), delivery charges may not be taxable.

For most e-commerce, shipping to buyers is taxable.

📌 doola’s Pro Tip for the Do’ers: Make sure your checkout cart applies local TPT to shipping when appropriate.

Arizona Excise Taxes for E-Commerce Sellers

Some e-commerce products are subject to Arizona excise taxes in addition to or separate from base sales tax/TPT:

• Tobacco products: Arizona taxes cigarettes at $2.00 per pack and other tobacco at varying rates.

• Motor fuel: Standard excise tax is $0.18 per gallon for gasoline and $0.26 per gallon for diesel as of 2025.

• Marijuana (recreational): Excise tax of 16% on top of state and local rates.

• Alcohol: Taxes by volume and type (beer, wine, and spirits have different rates).

📌 doola’s Pro Tip for the Do’ers: If you sell items online that fall under Arizona excise tax (vape products, tobacco, alcohol, etc.), read state rules carefully or talk to a specialist.

Avoiding Penalties: E-Commerce Compliance Tips

Here’s how to keep your Arizona compliance on track and your business audit-proof:

• Verify marketplace collection: Confirm Amazon/Etsy are collecting for you, and configure your other platforms yourself.

• Track your AZ sales monthly: Watching your totals helps you know when you hit economic nexus.

• Zero returns required: No sales? Still file. No skipping allowed.

• Keep exemption certificates handy: If selling to wholesalers or tax-exempt buyers, digital or paper copies must be retained.

• Don’t ignore mail: Arizona sends notices if you miss deadlines, so respond and resolve issues ASAP.

Penalties for missed returns: 4.5% per month up to 25% + interest on unpaid balance. Protect your business by staying on top of deadlines!

How doola Helps E-Commerce Sellers With Arizona Sales Tax

Navigating Arizona’s sales tax (TPT) can be complex, but you don’t have to manage it alone.

doola supports e-commerce founders and sellers with registration, filing, and keeping tax settings up to date, so you’re always prepared for local or state audits.

Focus on growing your business while we take care of compliance, registrations, exemptions, and state notices.

Simplify Arizona sales tax filing and management for your business. Book your demo with doola today.