Current Rate: 1.80%

Advertising

The activity of advertising by billboards, direct mail, radio, television, or any other means. All delivery or disseminating of information directly to the public for consideration shall be considered advertising.

        Tempe City Code § 16-405

Current Rate: 1.80%

Amusements

The operating or use of premises for movies, shows, exhibitions, concerts, carnivals, circuses, bowling alleys, skating rinks, tennis courts, golf courses, video games, pinball machines, dance halls, sports events, health, athletic or sports-related activities, batting and driving ranges, health spas, fitness centers,  etc. Any business charging admission for exhibition, amusement or entertainment is taxable under this business activity.  Membership fees are taxable under this classification.

Instruction in dance, instruction in martial arts and instruction in gymnastics are exempt from the Transaction Privilege Tax on Amusements in Tempe.

         Tempe City Code § 16-410

 Current Rate: 1.80%

Contracting-Prime

Construction contracting activities are any contracting changes to real property. Real property consists of the land, land improvements (roads, highways, railroads, bridges), and various structures or buildings affixed to land.  See the Arizona Department of Revenue's Contracting Guidelines.

        Tempe City Code § 16-415

Current Rate: 1.80%

Contracting-Speculative Builders

The gross income of a speculative builder considered taxable shall include the total selling price from the sale of improved real property at the time of closing of escrow or transfer of title.  See Arizona Department of Revenue's Contracting Guidelines.

        Tempe City Code § 16-416

Current Rate: 1.80%

Contracting-Owner Builder

The construction, alteration, repair or demolition of real property. A business/person may not meet the qualifications to be licensed as a contractor by the Arizona Registrar of Contractors, but would still be subject to the tax under a the contracting classification. Contracting includes the activities of developers, speculative builders, general contractors, contractors, subcontractors, construction managers, and owner-builders. See Arizona Department of Revenue's Contracting Guidelines.

        Tempe City Code § 16-417

Current Rate: 1.80%

Job Printing 

The activity of copying or reproducing an article by any means, process or method. This includes engraving, embossing, copying, micrographics and photo reproduction.

        Tempe City Code § 16-425

Current Rate: 1.80%

Manufactured Building 

The business of selling manufactured buildings within the City, including the site preparation, moving, and set-up charges. Manufactured buildings are factory built homes and buildings as defined in A.R.S. § 41-2142. This business activity occurs at the location of the sellers business.

        Tempe City Code § 16-427

Current Rate: 1.80%

Timbering and Other Extraction 

A business engaged in felling, producing, or preparing timber for sale, or engaged in extracting, refining, or producing any oil or gas for sale.

        Tempe City Code § 16-430

Current Rate: 0.10%

Severance-Metal Mining 

Mining activity includes any business engaged in mining, smelting, or producing minerals or mineral products for sale. This activity does not include the extraction, removal or production of sand, gravel or rock.

        Tempe City Code § 16-432

Current Rate: 1.80%

Publishing 

The publication of newspapers, magazines, or other periodicals within the City. Included in taxable revenue is subscription and advertising income, based on circulation of the published item within the City.

        Tempe City Code § 16-435

Current Rate: 1.80%

Hotels

The gross income from the business activity upon every person engaging or continuing in the business of operating a hotel charging for lodging and/or lodging space furnished to any person.  In addition to the one and eight-tenths percent (1.8%) Transaction Privilege Tax, there is a five percent (5%) transient lodging tax on the business activity of any hotel, motel, apartment, or individual engaged in charging for lodging space to any person for LESS THAN 30 DAYS.  This includes Short-Term Rentals and Vacation Rentals.

        Tempe City Code § 16-444

Current Rate: 5.00%

Hotel/Motel (Additional Tax)

In addition to the taxes levied as provided by Hotels, there shall be collected an additional tax in an amount equal to 5% of the gross income from the business activity of any hotel engaging or continuing within the City in the business of charging for lodging and/or lodging space furnished to any transient.  This also includes Short-Term Rentals.

        Tempe City Code § 16-447

Rental of Real Property (Residential/Commercial)

The leasing, licensing for use or renting of any real property within the City. Included as real property are land, rights-of-way, commercial building(s), office space, storage facilities, apartments, homes or other residential units, etc.  

Notice of Upcoming Residential Rental Tax Changes

Effective Jan. 1, 2025 the City of Tempe will no longer impose Transaction Privilege Tax (TPT) on income received from residential rentals with stays of 30 days or more also known as long-term rentals (business code: 45).

Rents received for periods December 2024 and prior remain taxable, including unlicensed properties and/or returns that may not have been filed and/or paid.  The December 2024 reporting period (Due Jan. 20, 2025) is still required to be filed and paid.

Short-term rentals (less than 30 days) and commercial leases are not impacted and remain taxable.

Please refer to the Arizona Department of Revenue for further details.

        Tempe City Code § 16-445

Current Rate: 1.80%

Rental of Tangible Personal Property 

This business activity includes leasing, licensing for use or renting equipment, automobiles, tools, furniture, coin-operated laundromat or car wash, videos, or any other tangible personal property.

        Tempe City Code § 16-450

Restaurants & Bars 

Restaurants include any business where articles of food, drink, or condiment are prepared or served to patrons for consumption on or off the premises. This activity includes bars, lounges, restaurants, caterers, street and mobile food vendors(food trucks) and "fast food" establishments.  See also Tempe Mobile Merchant license.

Please refer to the Arizona Dept of Revenue publication 605 for specific guidance on what is taxable and not taxable for restaurants, bars and caterers including how to handle tips and fees. 

        Tempe City Code § 16-455

Current Rate: 1.80%

Retail Sales 

Retail activity includes the sale of any tangible personal property, including items such as automobiles, furniture, clothing, equipment, etc.

        Tempe City Code § 16-460

Retails Sales Food for Home Consumption 

Retail sale of any items intended for human consumption as defined by rules and regulations adopted by Arizona Department Of Revenue. Food does not include alcoholic beverages or tobacco.

        Tempe City Code § 16-462

Current Rate: 1.80%

Telecommunication Service 

Telecommunication Service includes any service or activity connected with transmission over a communication channel. This activity includes telephone, telegraph, cable TV, computer interface, Internet and FAX services.   Alarm monitoring services. the gross income subject to tax under this section shall not include sales of monitoring services relating to an alarm system as defined in A.R.S. Section 32-101.

        Tempe City Code § 16-470

Current Rate: 1.80%

Transporting For Hire 

Any business providing the transport of persons or property by railroad, the transport of oil or gas through a pipeline or the transporting of property by aircraft is subject to tax under this classification. Transporting people by other means for a fee based on mileage is exempt. Transporting people by other means for a fixed fee or hourly rate is taxable under Rental of Tangible Personal Property.

        Tempe City Code § 16-475

Utilities

Utility Services include any business producing, providing or furnishing electricity, power, gas, or water to consumers within the City.

        Tempe City Code § 16-480

Current Rate: 1.80%

Use Tax Purchases

Use Tax From Inventory

Use tax is a tax on the purchase of tangible personal property (such as vehicles, equipment, supplies, etc.) on which an equivalent Tempe Transaction Privilege Tax has not been paid.

        Tempe City Code § 16-610

Current Rate: 1.80%

Am I A Speculative Builder?

The speculative builder is the real property owner who improves real property himself, or contracts through others, to improve real property. A speculative builder sells, or contracts to sell improved real property including:

• custom home
• model home
• inventory home (regardless of stage of completion)
• improved lots without a structure (residential or commercial)
• where water, power or streets have been constructed to the property line at any time (no time limit)
• any other property prior to completion or prior to the expiration of 24 months after substantial completion (substantial completion means that the property has passed final inspection, or has a certificate of occupancy, or is ready for immediate occupancy or use)
•  sale of property which has been reconstructed is also subject to the speculative builder tax.  Please refer to the MCTC  Sec. § 416.2 for more information on reconstruction.

Tax on speculative builders is due to the city in which the real property is located.

The sale of unimproved real property is not subject to the speculative builder tax.

What is the Current Rate for the City of Tempe?

Current Rate: 1.80%

What Deductions Can Be Taken From Gross Income?

• 35% Standard Deduction computed on income (or construction costs of an owner-builder) after all other deductions 
• State, County and City Tax Collected whether charged separately or included in the sales price

Where Do I Find More Details on Speculative Builders?

        Tempe City Code § 16-416

Construction 

Construction contracting is generally divided into three broad categories referred to as “MRRA” (modification, repair, replacement or alteration), “Modification” and Speculative Building (taxable by cities only).

• “MRRA” contracting covers a limited set of contracting activities generally related to enhancements made to existing buildings or structures.
• “Modification” contracting generally refers to all construction activities (including new construction) other than MRRA.
• Speculative builders are generally the owners of the real property who improve and sell the real property.  The speculative builder tax is imposed only at the city level.

NOTE:  If you are an out-of-state contractor performing construction contracting activities in Arizona, you are subject to Transaction Privilege Tax(TPT) because you have physical nexus.  The economic nexus rules and thresholds (applicable to retail sales) do not apply to streams of revenue from such contracting activities.  Out-of-state contractors performing contracting work in Arizona will generally be taxable under one of the categories listed above.

Contractors engaging in taxable construction projects or activities are required to obtain a TPT license. New contractors and out-of-state contractors are required to be licensed with the Registrar of Contractors and, in most cases, must post a bond with the Arizona Department of Revenue (ADOR).  Because of the bonding requirements for a new contractor, the online application is not allowed. The Arizona Joint Tax Application (JT-1) used to apply for a TPT License (and other licenses) may be accessed by clicking the link below.

ADOR Taxpayer Bond Form

ADOR Taxpayer Bond Exemption Application

ADOR License & Registration Contact: 602-716-6056  bondexemptionsteam@azdor.gov

Tempe Construction Permits

What is the Current Rate for the City of Tempe?

Current Rate: 1.80%

What Deductions Can Be Taken From Gross Income?

• Deduction for Business Code 015 for City and State

Where Do I Find More Details on Contracting?

        Tempe City Code § 16-415

Hotels, Motels, Short-Term Rentals & Vacation Rentals  

The gross income from the business activity upon every person engaging or continuing in the business of operating a hotel charging for lodging and/or lodging space furnished to any person for LESS THAN 30 DAYS.  This includes Short-Term Rentals and Vacation Rentals.

There are two Transaction Privilege Taxes collected for Tempe, one for State and County:                                       

• Hotels: 1.8%                                                                                        Hotel/Motel (Additional Tax): 5.0%
• State of Arizona & Maricopa County: 7.27%                               
• Total: 14.07%

Transaction Privilege Tax 

Short-Term Residential Rentals are taxed like Hotels for TPT: 

NOTE: An Online Lodging Marketplace (OLM) will collect and pay TPT on your behalf.  Any rentals to guests on your own or direct to the guest must be filed and paid by the property owner.  All TPT licenses are required to file each month even if the liability is $0 either for no gross revenues or because all revenues were paid by the OLM (Deduction Code 775).

Operating a Short-Term Rental or Vacation Rental?     

Licensing of your Short-Term Rental or Vacation Rental is required in the City of Tempe per Arizona Revised Statutes §9-500.39 and City of Tempe Ordinance No. 02023.01. Click the bell to license your property:

Please note that Tempe Tax & License is actively seeking short-term rental and vacation rental properties not in compliance with: Transaction Privilege Tax(TPT), Maricopa County Assessor's rental registration and Tempe's Short-Term Rental Registration requirement.  We use a technology that can identify property address, parcel and owner information.  Penalties may be as high as $1,000 per unit per month.

*we do not provide an update to complainants of short-term rentals

What activities are taxable within the Hotel, Motel, Short-Term Rental or Vacation Rental?

Arizona Tax Matrix for Hotel/Motel Lodging Industry

 Where Do I Find More Details on Hotels, Short-Term Rental & vacation Rentals?

 § 444  Hotels

 § 447 Hotel/Motel (additional tax)

§ 16-444 Hotels

§ 16-447  Rental, leasing, and licensing for use of real property—Additional tax upon transient lodging

What are Retail Sales?

The gross income from the business activity upon every person engaging or continuing in the business of selling tangible personal property at retail to someone who plans to use the items and not rent or resell them.

The seller owes the tax to the City of Tempe whether or not the seller added the tax to the price of the item sold.

Exemption certificates below.

What is the amount of TPT due the City of Tempe?

Current Rate: 1.8%

Retail businesses located in Tempe

Transaction Privilege Tax(TPT) liability is based upon the seller’s location, NOT the location of the buyer for "in-state sellers". If your business location is physically located in the City of Tempe, you must have a Transaction Privilege Tax license. 

Retail businesses without a physical presence in Arizona but who make sales to Arizona consumers

Arizona law requires remote sellers into Arizona to have a Transaction Privilege Tax license and file and pay TPT if the gross sales generated from direct sales into Arizona is more than $100,000 in the previous year(before any deductions).  Thresholds are calculated by including any income generated by an affiliated party of either a remote seller or a marketplace facilitator.

Sales made by a remote seller directly into Arizona (i.e., not through a marketplace) are reported by the remote seller that must be licensed and collect once the threshold is met.

Remote Seller: 

Any person or business selling or shipping products into Arizona but does not have a physical presence. 

Marketplace: 

Any place (physical, online or electronic) where tangible personal property is sold. This includes a store, booth, website, catalog, etc.

Marketplace Facilitator: 

Any person or business operating a marketplace (e.g., website), and facilitating transactions between a buyer and retailer/wholesaler, and accepting payment on behalf of the retailer/wholesaler. TPT filing is required if in the current or previous calendar year a marketplace facilitator makes more than $100,000 sales into Arizona.

Marketplace Seller: 

Any remote seller that makes all sales through a marketplace.  Marketplace sellers do not need to collect TPT on transactions when a marketplace facilitator is collecting and remitting TPT for them.

Affiliated Party: 

Any person who has an interest, direct or indirect, of more than 5% in another.

Exemption Certificates

TPT Exemption Certificate - General (Form 5000)

Marketplace Seller/Remote Seller Exemption Certificate (Form 5020)

Arizona Resale Certificate 

Arizona Resale Certificate (Form 5000A)

 "Our mission is to provide quality service to all Tempe taxpayers, and administer the tax code in a fair and equitable manner."