Phoenix Sales Tax Guide for Businesses in 2025

No matter where you live or where your online business is based — if you have customers in Phoenix, you must follow city and local sales tax rules in addition to Arizona’s rules. That’s what this guide is for! This guide includes everything you need to know about digital tax laws in Phoenix, whether your customers live in Arcadia or CenPho.

Phoenix Tax Jurisdiction Breakdown for 2025

• Arizona State Sales Tax: 5.6%
• Maricopa County Sales Tax: 0.7%
• Phoenix City Sales Tax: 2.3%

What is the sales tax rate in Phoenix, Arizona?

The minimum combined 2025 sales tax rate for Phoenix, Arizona is 8.6%. This is the total of state, county and city sales tax rates. The Arizona sales tax rate is currently 5.6%]. The Maricopa County sales tax rate is .7%. The Phoenix sales tax rate is 2.3%.

These rates go for standard taxable products. But other rates might apply to your business.

If you’re selling “vice” products like tobacco or alcohol, you might have an increased rate. If you’re selling essential items, such as medicine or clothing, or educational materials, you might have an exempt or reduced rate. More on that next!

What products are exempt from Phoenix sales tax rate?

Phoenix has quite the long list of exemptions, but they are summarized as:

• Personal Property: Items brought into the city for personal use (under $1,000).
• Service Charges: Delivery, installation, repair, and service contract charges.
• Medical: Prosthetics and purchases by healthcare organizations.
• Business Equipment: Income-producing equipment, rental supplies, and mining materials.
• Transportation: Motor vehicle fuel and vehicles sold to nonresidents.
• Media & Entertainment: Rentals for film, magazines promoting tourism.
• Food & Beverages: Food for schools, nonprofits, and airlines.
• Farming: Seed, feed, and livestock for slaughter.
• Energy: Renewable energy credits and alternative fuel purchases.
• Technology: Computer data center equipment and paper manufacturing supplies.

What digital products are taxed in Phoenix?

First, let’s confirm what you’re trying to sell in Phoenix. Are you selling digital products?

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website.

You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:

• E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
• Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
• Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
• Websites, site hosting services, and internet service providers.
• Online ads and affiliate marketing. Income from these services can be considered taxable under digital tax policies.

Some US states can have more specific definitions or exceptions. In Phoenix, the sales tax exemptions related to digital products mainly apply to media, education, and public service uses:

• Digital media (film, tape, slides) licensed for use by theaters, radio stations, TV stations, or subscription TV services.
• Electronic or digital media materials purchased for publicly funded libraries.
• Magazines or periodicals published by the state to promote tourism.

How does Phoenix sales tax compare to the rest of Arizona?

Phoenix’s combined sales tax rate of 8.6% is mid-range for Arizona, where rates vary from 5.6% to 11.2%. This reflects the city’s approach to addressing local issues and funding city services through the sales tax system.

Learn more about sales tax rules state-wide in this business guide to sales tax in Arizona

What creates sales tax nexus in Phoenix?

Since Phoenix is located in Arizona, it follows the same state-level sales tax nexus rules. Forms of Arizona state sales tax nexus include:

• Economic nexus: When a business sells goods worth $100,000 or more in Arizona during the previous or current tax year. More on that below!
• Physical location: This could be an office or a warehouse holding your inventory.
• Employee location: If you have an employee or any other type of representation based in a particular state or city, your business must register for sales tax there.
• Affiliate nexus: If you rely on in-state businesses to promote and refer your business, and you receive a substantial amount of income through these affiliates, then you have sales tax nexus.
• Trade Shows: If you attend a convention or trade show in Arizona and make even one sale, you might be liable for sales tax.

Phoenix economic nexus as a remote seller

If your business is fully located outside of Arizona, then economic nexus is your main concern. Here’s how it works. The economic threshold amount refers to your total sales in the whole state, during any 12-month period. This can be a calculation of sales in the last twelve months, or a prediction of sales in the next twelve months — any rolling year-long period, past or future.

Basically, if your annual sales in Arizona remain below $100,000, then you don’t need to worry about sales tax at all. Phew!

But once your sales do surpass $100,000, then you must register for sales tax and comply with all of the Arizona rules around tax rate and collection, invoices, and filing returns.

Who needs a seller’s permit in Phoenix?

Any business with sales tax nexus, according to the rules above, must apply for a seller’s permit in Arizona right away.

The seller’s permit comes with a sales tax registration number, which establishes you in the Arizona tax system as a legal business. This number tracks your business through the system: the taxes you pay, the tax credits you receive, plus the tax you charge from customers.

How to get a seller’s permit in Phoenix

So, it turns out you do need to register for tax in Phoenix. Don’t worry! Just follow these instructions on how to register for sales tax in Arizona and that will cover you across the state.

How to calculate Phoenix sales tax?

Once you’re registered for taxes, you’re expected to apply sales tax to every taxable sale to a Phoenix resident. That means 8.6% for most products.

If your customer is a fellow business, and they’ve provided a valid sales tax exemption certificate, then adding and collecting tax isn’t necessary.

How to collect sales tax in Phoenix

Tax-compliant receipts in Phoenix

In order to comply with tax laws, you should include the following information on your receipts or invoices to customers in Phoenix:

• Your business’ name and address
• Your business’ sales tax registration number
• Invoice date
• Invoice sequencing number
• Buyer’s name and address
• Buyer’s sales tax registration number, if they have one.
• sales tax (amount and rate) applied to each item
• Final amount after tax is added

The easiest solution for the sales tax receipt would be to use a sales tax software that automatically generates and sends all invoices (as soon as the sale is complete), and also stores them in the cloud for you.

Quaderno provides automatic tax invoicing for every transaction. The app sends tax-compliant receipts, invoices, and credit notes automatically, on the spot. You can also set up recurring invoicing. In fact, Quaderno helps automate many other parts of tax compliance, from adding the correct tax rate calculations to your sales to providing instant reports for filing returns. Give it a try for free.

How to file and pay sales tax in Phoenix

Charging and collecting tax is only the first half of staying compliant. The second half is filing returns and paying whatever you might owe to the government.

Frequency for sales tax returns in Arizona:

• Businesses selling less than $2,000 a year in taxable goods must file annually.
• Businesses selling $2,000-$8,000 a year must file quarterly.
• Businesses selling over $8,000 a year must file monthly.

Arizona electronic returns are filed in AZTaxes and are due on the last business day of the month. The due dates vary for other types of filing and you can find the information here.

You can usually file and pay online! Check out more instructions on how to file sales tax in Arizona.