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Arizona – AZ Sales Tax Calculator: User Guide

Started a new business in Arizona? Confused how much sales tax to apply to your product? Well! Don't Worry! You have landed at the right place. Our Arizona Sales Tax Guide, along with a one-of-its-kind Arizona Sales Tax an Reverse Sales Tax calculator are enough to succeed.

Arizona Sales Tax Facts:

• In Arizona, Sales Tax is referred to as Transaction Privilege Tax (TPT), which is collected, managed, and remitted back to the Arizona Department of Revenue. However, individuals and businesses (under certain conditions) who weren't charged with a sales tax by the retailers are subjected to USE tax.
• The sales tax rate in Arizona on the state level is 5.6%.
• The local sales tax rate In AZ on county-level ranges between 0% and 2%.
• The local sales tax in Arizona charged on City level ranges between 0% and 5%.
• Some municipalities and cities may also apply a special sales tax rate ranging from 0% to 1.75%.
• The common Arizona tax type includes consumers use, rental tax, sales tax, sellers use, lodgings tax, and more.
• Arizona's lowest possible tax rate is 5.6%, which is charged in Phoenix, Arizona.
• Arizona's highest possible tax rate is 11.2%, which is charged in Mammoth and Superior, Arizona.
• The average sales tax in Arizona after local surtaxes is 17%.
• Prescription drugs and Groceries are exempt from the Arizona sales tax.
• The sales tax rates in Arizona are lower than 78.8% of the states in the US.
• Unlike many other states, Items like candies and sodas are classified as Groceries for sales tax purposes.
• Gasoline, alcohol, and cigarettes and few other items are subject to various Arizona excise taxes in addition to the sales tax.
• Purchases made outside of Arizona or online sales, which are not subjected to Arizona Sales Tax, are subjected to Arizona Use Tax of 5.6%, along with local use taxes.

How to calculate Sales Tax in Arizona?

Unlike Value Added Tax (VAT), the Arizona State applies Sales Tax, also known as the Arizona Transaction Privilege Tax (TPT), on the end consumers of the product. This tax is collected, managed, and transferred to the Arizona Department of Revenue (ADOR) by the business owner while staying in compliance with state laws and avoid penalties and interest.

The sales tax depend on three factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Location and Products: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city in Arizona.
3. Exemptions: Almost all goods are eligible for sales tax regulation. However, products, including groceries, prescription medicine, and medical devices, are exempted under Arizona Law. So you should check with Arizona state government as to which goods and services sold in Arizona are subject to sales tax.

To calculate Sales Tax in Arizona, follow the steps below:

Step 1 – Determine your Nexus:

You, as a Business owner, are only required to collect sales tax if you have Sales Tax Nexus in the Arizona State. And to determine your Nexus in Arizona, you must have any of the following:

• A place of business or an office in Arizona
• A warehouse or inventory stored in the state
• An employee present in the Arizona state for more than two days per year
• Remote entity nexus
• Ownership of real or personal property
• Delivery of merchandise in the state in vehicles owned by the taxpayer
• Representatives like Independent contractors in Arizona for more than two days per year

Step 2 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Arizona, next is to deduce the Sales Tax rate (State + Local Sales Tax) applicable on your product, for which you can refer the tables below:

Arizona Sales Tax Rates by Location:

The state-wide Sales Tax rate is Arizona is 5.60%. Besides, many cities and counties levy additional local sales tax on taxable goods. Following are the Sales Tax rate on State, County, and city-level in Arizona:

Step 3 – Calculate Sales Tax:

After the determination of the Sales Tax rate according to the location and product category, it is easy to calculate the sales tax amount charged on the product and gross price (amount after-tax) of a product.

Example # 1:

For instance, you are selling a Microwave oven on your store in Apache Junction, Arizona, having a net price tag of $370. The amount that a buyer has to pay (including sales tax) on a cash counter would be:

Manual Method:

Net Price (amount before Tax) of a Microwave Oven: $370

Total Sales Tax rate: 5.6% (Arizona State) + 1.6% (Pinal County) + 2.4% (Apache Junction) = 9.6%

Total Sales Tax amount = $370 x 9.6% = $35.5

Gross Price (Amount after Tax) = 370 + 35.5 = $405.5

It means the amount the buyer has to pay for a microwave oven on a cash counter would be $405.5.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $370 Net Price of a Microwave Oven as Amount Before Tax
2. Input or select 9.6% of the combined Sales Tax rate on the Tax Rate

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much sales tax buyer has actually paid on a product or you may want to check the accuracy of the sales tax indicated on your item's receipt.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Arizona Sales Tax Calculator can perform this calculation like a Pro.

Example:

Your buyer has paid $90 for a smartwatch at your store in Flagstaff, AZ. Now the buyer is inquiring how much the Smartwatch actually cost before the sales tax was added. So you need to follow the steps below to determine the amount before tax (net price) of a smartwatch:

Gross Price (Amount after Tax) of Smartwatch: $90

Total Sales Tax rate: 2.281% (Flagstaff) + 1.3% (Coconino County) + 5.6% (Arizona State) = 9.181%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

90 = [Net Price x ((9.181/100) + 1)]

90 = Net Price x 1.09

$82.56 = Net Price

So the original Price (net price) of the Smartwatch was $82.56.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the above mentioned manual method. All you need is:

1. Input the $90 Gross Price of Smartwatch as Amount after Tax
2. Input or select 9.181% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

FAQs