The City of Tempe, and most other cities in Arizona, impose a Transaction Privilege (Sales) Tax on specific business activities just like the State of Arizona. The City tax is in addition to the tax imposed by the State. The City of Tempe tax rate, imposed on the business, is one and eight-tenths percent (1.8%) effective July 1, 2014. Prior to July 1, the tax rate was two percent (2.0%) on most activities and one and eight-tenths percent (1.8%) on construction contracting and sales of food for home consumption. A taxable business will need to get licensed with both the City of Tempe as well as obtain a license with the State of Arizona. A list of the taxable activities within Tempe can be found at Taxable Activities.
Note: The City of Tempe and the State of Arizona maintain separate and distinct privilege (sales) tax codes. As a result, there are certain situations and circumstances where the taxability of certain business activities is different between the two codes.
The annual license fee is $50, and the application fee is $20. Privilege Tax Licenses must be renewed annually.
If you receive an Account Statement from the City of Tempe and have questions, call our general number (480) 350-2955.
The transaction privilege tax is commonly referred to as a sales tax. However, the tax is on the privilege of doing business in Tempe and is not a sales tax. The licensing and taxable activities for Tempe may differ from the State and other Arizona cities. Every effort is made to provide adequate and accurate information. However, any verbal advice or information we give you is not binding on the City.