Arizona sales tax for online sellers: nexus, permit and filing

What is the Arizona sales tax rate?

The state transaction privilege tax rate on retail sales is 5.6%. Counties and cities add their own rates, so combined rates in the larger cities are often above 8%. The tax is legally on the seller for the privilege of doing business in Arizona, but sellers normally pass it on to customers, so in practice it is charged like a sales tax. The Department of Revenue collects the city taxes too, on one return.

When does an online seller have to collect in Arizona?

You must hold a license and pay the tax if you have a physical presence in Arizona, or if your gross retail sales into Arizona are more than $100,000 in the current or previous calendar year. There is no transaction-count test. Under a Department of Revenue ruling from December 2024, only sales in the retail classification count, so software as a service, which Arizona taxes under a different classification, does not count towards the $100,000. Sales made through a marketplace that collects the tax are left out under most guidance. A seller who passes the threshold during a year starts on the first day of the month that begins at least 30 days later.

How nexus works in general is covered in physical vs economic nexus and economic nexus explained.

What if you sell on Amazon, eBay or Etsy?

Arizona requires marketplace facilitators to collect and remit transaction privilege tax on the sales they facilitate, so you do not collect on those orders. Your own website and other direct channels remain your responsibility. See marketplace facilitator laws.

How do you register?

Apply online through AZTaxes, using the application for remote sellers. The state license costs $12, and city license fees are waived for remote sellers. The license runs for the calendar year and is renewed each January. See Arizona yearly filings for the renewal.

What are the steps once you have nexus?

1. Confirm nexus

   Check your presence and your sales into Arizona against its threshold.

2. Register before collecting

   With the Arizona tax agency, as set out above.

3. Set up your store

   Charge the correct combined rate for each delivery address and product.

4. File and pay

   On the schedule Arizona assigns, including zero returns where required.

How are returns filed?

Returns are filed online through AZTaxes, due by the 20th of the month after the period. Most remote sellers are set up to file monthly, with quarterly or annual filing for smaller amounts. The return reports sales by city and county code, so your store needs to record the delivery location of each order.

See how to file a sales tax return.

How is the transaction privilege tax different from sales tax?

A sales tax is owed by the buyer and collected by the seller. Arizona's tax is owed by the seller, on its income from selling. For an online retailer the result is nearly the same, since the tax is added to the price, but it explains some differences: the license is called a TPT license, activities are taxed under named classifications such as retail or rental, and some things other states exempt are taxed. Arizona taxes software as a service, for example. See sales tax on SaaS.

When do you start collecting after passing the threshold?

If you pass $100,000 part-way through a year, the obligation begins on the first day of the month that starts at least 30 days after the date you passed it. A seller who passes the threshold on February 15 starts on April 1. Register during that window so the license is in place before the first taxable sale.

What else should sellers know?

• Sellers outside the US: the same rules apply wherever the business is based. See selling on Amazon US as a non-resident.
• Late registration: tax you should have collected becomes your own debt. See voluntary disclosure agreements and collected but not remitted.
• Records: keep sales by delivery address, tax collected and any certificates. See exemption certificates and sales tax audits.
• Stopping: returns stay due until the account is closed. See filing frequency and cancelling a sales tax permit.
• Store settings: switch on collection only once you are registered. See Shopify sales tax setup.

This guide is general information. It is not tax or legal advice for your situation.