What Is the Sales Tax in Scottsdale, Arizona?
Understand Scottsdale, Arizona's sales tax: learn its components, what's taxed, how it applies to purchases, and online transactions.
Sales tax is a consumption tax levied on the sale of goods and services, serving as a significant revenue source for state and local governments to fund public services. In Arizona, this tax is known as the Transaction Privilege Tax (TPT), which is legally imposed on the vendor for the privilege of conducting business within the state. While the TPT is a business privilege tax, it is common practice for businesses to pass this cost on to consumers at the point of sale. This article specifically details the application of the Transaction Privilege Tax in Scottsdale, Arizona.
The Combined Sales Tax Rate
The total sales tax rate applied to purchases in Scottsdale, Arizona, is a combination of state, county, and city rates. The combined sales tax rate in Scottsdale is 8.05%.
The Arizona state Transaction Privilege Tax (TPT) contributes 5.60% to the total rate. Maricopa County, where Scottsdale is located, imposes a sales tax of 0.70%. The City of Scottsdale adds a municipal sales tax rate of 1.75%.
What is Subject to Sales Tax
In Arizona, the Transaction Privilege Tax applies to the retail sale of tangible personal property. This includes most physical goods purchased by consumers, such as clothing, electronics, and home furnishings. Beyond tangible goods, certain services are also subject to TPT in Arizona and Scottsdale. These can include amusements, personal property rentals, and various contracting activities.
However, not all transactions are taxed. A notable exemption is most unprepared food, often referred to as groceries, intended for home consumption. This exemption covers items purchased at grocery stores for cooking at home, including candy and soda. Conversely, prepared foods, such as restaurant meals or hot deli items, are taxable.
Prescription drugs and most medical devices are also exempt from TPT. Other common exemptions include textbooks for students and certain machinery or equipment used in manufacturing processes. Professional services, such as those provided by lawyers or accountants, are not subject to TPT.
Understanding Sales Tax Application
The combined sales tax rate in Scottsdale is applied to the purchase price of taxable goods and services at the time of sale. When you make a purchase, the tax amount is calculated based on the item’s price before any discounts or other charges. This tax is then added to the subtotal of your purchase.
For instance, if you purchase a taxable item priced at $100 in Scottsdale, the 8.05% sales tax would amount to $8.05. This means your total payment for the item would be $108.05. Businesses are required to display the sales tax as a separate line item on your receipt, providing transparency regarding the tax collected.
Online Sales Tax in Scottsdale
Sales tax rules for online purchases in Scottsdale largely mirror those for in-person transactions, particularly since the 2018 South Dakota v. Wayfair, Inc. Supreme Court decision. Remote sellers, including online retailers without a physical presence in Arizona, are required to collect Arizona TPT if their sales into the state meet certain economic nexus thresholds. Currently, the economic nexus threshold for remote sellers is $100,000 in gross sales into Arizona in the current or previous calendar year.
Many online marketplaces, known as marketplace facilitators (e.g., Amazon), are also responsible for collecting and remitting TPT on behalf of third-party sellers using their platforms. This means that even if you purchase from a small business through a large online marketplace, the sales tax is handled by the facilitator. For consumers in Scottsdale, this translates to sales tax being collected on most online purchases, regardless of where the seller is located. Remote sellers are required to apply the tax rate based on the customer’s shipping address.