Arizona Sales Tax Nexus (Transaction Privilege Tax)

Arizona does not use the term “sales tax” the same way most states do. Arizona uses Transaction Privilege Tax (TPT), which is a tax on the seller for the privilege of doing business in Arizona. In practice, sellers often pass the cost along to customers, but the seller is responsible for registering, filing, and paying the tax.

This page explains when you have Arizona nexus and when you need to register for TPT, including rules for remote sellers and marketplace sales.

What Creates Arizona Nexus?

Arizona nexus generally happens in two ways:

1. Physical nexus (you have a meaningful presence in Arizona)
2. Economic nexus (you exceed Arizona’s sales threshold)

If either applies, you may need an Arizona TPT license and you may need to collect and remit TPT.

1) Physical Nexus in Arizona

You can create physical nexus in Arizona if your business has a real in-state presence, such as:

• An office, storefront, warehouse, or other place of business in Arizona
• Employees or contractors working in Arizona
• Inventory stored in Arizona (including some fulfillment arrangements)
• Regular in-person selling, service, installation, or similar activity in the state

Physical nexus is fact-specific, so it’s worth looking closely at your exact setup.

2) Economic Nexus for Remote Sellers (Out-of-State Sellers)

Arizona has an economic nexus rule for remote sellers based on sales into Arizona. If you exceed the threshold, you generally must register and begin collecting and remitting TPT.

Important marketplace detail: Arizona’s remote seller threshold is generally evaluated using your direct sales into Arizona, not sales made through a marketplace facilitator when that marketplace is responsible for collecting and remitting the tax.

So when you’re thinking about whether you crossed the threshold:

• Direct website sales shipped into Arizona: usually count
• Sales through a marketplace facilitator: often do not count toward your remote-seller threshold if the marketplace is collecting and remitting for those sales

If you have both direct sales and marketplace sales, the direct sales are usually the main thing to measure for remote seller threshold purposes.

Marketplace Facilitator Rules (Amazon, Etsy, eBay, Walmart, and Similar Platforms)

If you sell through a marketplace facilitator, the marketplace is often responsible for collecting and remitting Arizona TPT on those marketplace transactions.

This usually means:

• If you sell only through marketplaces, you often do not need an Arizona TPT license
• If you sell direct and through marketplaces, you may still need a license once your direct sales create nexus, and you may still have filing obligations for your direct sales

Marketplace rules can vary based on your facts, how the marketplace reports, and whether you also have physical nexus.

When Do You Need to Register and Start Collecting?

If you create Arizona nexus (physical or economic), your next steps are usually:

1. Register for an Arizona TPT license
2. Set up your system to collect the correct Arizona tax
3. File returns and remit tax on the required schedule

The timing of when to begin collecting can depend on when you cross the threshold and whether you also have physical presence.

Arizona Tax Rates and Sourcing Basics

Arizona’s tax is a combination of the state rate and local city/county rates. The total rate can vary depending on where the customer receives the product or service, and in some cases the “business code” category of what you’re selling.

Because rates vary by location, it’s important to use a reliable rate lookup and apply the correct local rates based on your transaction details.

FAQ

Does Arizona include marketplace sales in the $100,000 threshold?

In many cases, Arizona treats marketplace sales differently because the marketplace facilitator is the party collecting and remitting the tax. For remote sellers, the threshold is typically evaluated using your direct Arizona sales, not your marketplace-only sales when the marketplace is handling TPT.

If I only sell through Amazon or Etsy, do I need an Arizona TPT license?

Often no, as long as the marketplace facilitator is collecting and remitting Arizona TPT for your sales and you have no other Arizona nexus triggers (like inventory, employees, or a physical presence).

If I sell both direct and through marketplaces, what happens?

You may have nexus from your direct sales or physical presence. In that case, you may need an Arizona license and you may need to file returns for your direct sales, while the marketplace continues to handle TPT for the marketplace transactions.

What is Arizona’s state TPT rate?

Arizona’s state rate is 5.6%, and local rates may apply depending on the customer’s location.

Is Arizona a sales tax state?

Arizona uses Transaction Privilege Tax (TPT), which is different in structure from a typical sales tax, but most customers experience it the same way because it shows up at checkout.

How do I know which local rate to charge?

Because Arizona rates vary by city and county, the best approach is to use a location-based rate lookup and make sure your address and sourcing setup are correct.

Need Help Confirming Arizona Nexus?

If you want a quick nexus review, we can confirm:

• whether you have Arizona nexus
• whether your marketplace sales are being handled correctly
• what your start date should be
• what to do if you should have registered earlier