Understanding sales tax in Gilbert, Arizona just got more complicated. After 25 years of rate stability, the town approved its first sales tax increase since 2000; and the changes affect every business selling to Gilbert’s 288,790 residents.
For e-commerce sellers and business owners, this means updated rates, new use tax obligations, and stricter compliance requirements. Miss the details, and you’re facing penalties that cut straight into your margins.
Hands Off Sales Tax (HOST) specializes in navigating exactly these situations! Helping businesses manage multi-state sales tax compliance, including Arizona’s unique Transaction Privilege Tax (TPT) system and local jurisdictions like Gilbert.
What Is the Current Sales Tax Rate in Gilbert AZ?
As of January 1, 2025, the combined sales tax rate in Gilbert is 8.3%:
- Arizona State TPT: 5.6%
- Maricopa County Tax: 0.7%
- Gilbert Town Tax: 2.0% (increased from 1.5%)
The Gilbert Town Council approved the increase on October 22, 2024, adding 50 cents to every $100 purchase. Gilbert’s sales tax rate sat at 1.5% from 2000 through 2024—making this the first adjustment in a quarter-century.
Even after the increase, Gilbert’s rate remains competitive with peer Phoenix metro communities charging between 1.5% and 2.9%.
Arizona’s Transaction Privilege Tax System
Arizona doesn’t impose traditional sales tax. The state uses a Transaction Privilege Tax (TPT)—taxing the privilege of doing business rather than the consumer directly.
While TPT functions like sales tax from the customer’s perspective, the legal distinction matters. The tax burden falls on the seller, though businesses pass costs to customers. This affects calculation methods, reporting requirements, and registration obligations across state, county, and municipal jurisdictions.
Why Gilbert Raised Taxes After 25 Years
On October 22, 2024, the Gilbert Town Council voted 6-1 to approve three tax increases effective January 1, 2025:
- Sales Tax: 1.5% → 2.0%
- Use Tax: 0% → 2.0% (newly implemented)
- Bed Tax: 2.8% → 5.0%
The increases generate approximately $55 million annually for critical infrastructure. Gilbert’s Parks and Recreation facilities are maxed out, police and fire departments need additional stations, and existing infrastructure requires updates.
Unlike most Arizona communities, Gilbert doesn’t impose primary property tax. Infrastructure funding comes from bonds or sales tax revenues. Gilbert plans to cash-fund projects where possible to minimize interest costs.
Gilbert’s New Use Tax Explained
Gilbert’s new 2.0% use tax applies to purchases from out-of-state vendors generating less than $100,000 in Arizona sales annually.
Use tax closes the gap between local retailers and remote sellers. When out-of-state vendors exceed $100,000 in Arizona sales, they must collect TPT, making use tax unnecessary for those purchases.
Economic Nexus: When You Must Collect Arizona Tax
Following the 2018 Wayfair decision, Arizona requires remote sellers to collect TPT after exceeding $100,000 in gross retail sales to Arizona customers in the current or previous calendar year.
Arizona uses trailing nexus. Exceed the threshold in either period, and obligations apply for the remainder of the current year plus the entire following year. Cross $100,000 in December 2024? You’re collecting through all of 2025, regardless of 2025 sales volume.
What counts: Gross retail sales delivered to Arizona customers, including shipping charges when the sale itself is taxable.
What doesn’t count: Sales through marketplace facilitators like Amazon or eBay—the platform handles TPT collection and remittance.
Registration Requirements for Gilbert Businesses
Register for Arizona TPT and collect Gilbert sales tax if you have:
- Physical nexus in Gilbert (office, employees, inventory, property)
- Economic nexus in Arizona (exceeded $100,000 in Arizona sales)
- Retail sales to Gilbert customers
Physical presence creates immediate obligations regardless of sales volume. A single remote employee working from Gilbert triggers physical nexus.
Marketplace facilitators handle TPT for platform sales, but you’re responsible for direct sales through your own website or other channels.
ZIP Code vs. Street Address: Why Precision Matters
Gilbert spans 6 ZIP codes (85233, 85234, 85295, 85296, 85297, 85299), with some addresses overlapping into neighboring jurisdictions.
Using ZIP codes alone creates risk! Portions of 85298 fall into Queen Creek (8.55% rate) rather than Gilbert (8.3%). Software relying on ZIP code matching may apply incorrect rates, creating audit exposure.
Solution: Configure sales tax software to use street-level geocoding, not ZIP code approximations. This ensures accurate rate application for every Gilbert transaction.
Gilbert’s Taxable Business Activities and Rates
Gilbert taxes specific business activities at the 2.0% town rate using region code GB:
Commonly Taxed Activities:
- Retail sales (business code 017)
- Restaurants and bars (code 017)
- Commercial property rental: 2.0% Gilbert + 0.5% Maricopa = 2.5% total
- Equipment and personal property rental
- Contracting (prime and specialty)
- Telecommunications services
- Utilities
Special Considerations:
- Short-term rentals (under 30 days): 2.0% sales tax + 5.0% bed tax = 7.0% total
- Long-term residential rentals (30+ days): Tax eliminated January 1, 2025 per Arizona law
- Hotel/motel operations: 2.0% sales tax + 5.0% bed tax = 7.0% total on lodging
View Gilbert’s complete taxable activities list for industry-specific rates.
Common Arizona Sales Tax Exemptions
Gilbert follows Arizona’s standard exemptions:
- Groceries (food for home consumption)
- Prescription drugs and prescribed medical equipment
- Manufacturing equipment and machinery
- Required college textbooks
- Agricultural products sold to farming operations
Most tangible personal property remains taxable: prepared food, restaurant meals, clothing, electronics, general merchandise.
How Gilbert Compares to Phoenix Metro Cities
| City | Combined Rate | Breakdown |
| Gilbert | 8.3% | 5.6% state + 0.7% county + 2.0% city |
| Chandler | 8.1% | 5.6% state + 0.7% county + 1.8% city |
| Mesa | 8.3% | 5.6% state + 0.7% county + 2.0% city |
| Scottsdale | 8.05% | 5.6% state + 0.7% county + 1.75% city |
| Tempe | 8.1% | 5.6% state + 0.7% county + 1.8% city |
Gilbert’s 2.0% city rate now matches Mesa and exceeds Chandler, Scottsdale, and Tempe; but remains within the competitive range for Phoenix metro communities.
Filing Deadlines and Requirements
File Arizona TPT returns through AZTaxes.gov by the 20th of the month following the reporting period. Filing frequency depends on tax liability—most businesses file monthly.
Late filing penalties: Up to 4.5% per month of unpaid tax (capped at 25%), plus interest on outstanding balances.
Filing Example: Gilbert Retail Business
Scenario: Online retailer with Gilbert warehouse, $50,000 monthly taxable sales
Monthly Filing Process:
- Log into AZTaxes.gov
- File Form TPT-2 (multi-location) or TPT-EZ (single location)
- Report using specific codes:
- Location code: Assigned by ADOR for your Gilbert address
- Region code GB: Gilbert transactions
- Region code MAR: State/county portion
- Business code 017: Retail classification
Tax Calculation:
- Gilbert portion (GB): $50,000 × 2.0% = $1,000
- State/County (MAR): $50,000 × 6.3% = $3,150
- Total due by 20th: $4,150
Understanding Region and Business Codes
When filing, use specific codes:
- Gilbert’s region code: GB
- Maricopa County code: MAR
- Location code: Assigned by Arizona Department of Revenue for each physical location
Business codes vary by activity type. Retail uses code 017, while commercial property rental uses different codes for Gilbert (GB 213) versus State/County (MAR 013).
What If You Haven’t Been Collecting Tax?
If you’ve exceeded Arizona’s threshold without collecting tax, you face retroactive liability plus interest and penalties.
The solution: Voluntary Disclosure Agreements (VDAs). VDAs limit lookback periods (typically 3-4 years versus unlimited exposure) and often eliminate 100% of penalties, though interest still applies.
HOST files VDAs for businesses discovering past nexus, resolving liabilities while minimizing financial impact. Critical: act before Arizona contacts you. Audit notices eliminate VDA eligibility.
How HOST Simplifies Gilbert Sales Tax Compliance
Sales tax compliance shouldn’t consume your operational bandwidth. At Hands Off Sales Tax, we’ve focused exclusively on sales tax services for 25+ years.
Nexus Analysis: We analyze sales data to pinpoint exactly where you’ve triggered economic or physical nexus thresholds, including Arizona’s $100,000 requirement.
Sales Tax Registration: We handle Arizona Department of Revenue registration and obtain necessary licenses for state, county, and municipal jurisdictions like Gilbert.
Sales Tax Filings: We prepare and file returns monthly, quarterly, or annually—ensuring compliance with Arizona’s deadlines and Gilbert’s requirements.
Audit Defense: We manage communications with tax authorities, prepare documentation, organize records, and work to minimize liability during Arizona or Gilbert audits.
Voluntary Disclosure Agreements: If you discover past obligations, we file VDAs with Arizona to limit lookback periods and abate penalties.
Free Sales Tax Software Review: We audit your TaxJar, Avalara, or other automation tools to identify configuration mistakes before they create liability.
Through parent company TaxMatrix, we’ve helped North America’s largest companies manage sales tax requirements. Now we bring that expertise to small and medium-sized e-commerce businesses.
Ready for Expert Sales Tax Support?
Tax compliance shouldn’t distract from growth. Every hour researching rates, filing returns, or responding to notices is an hour not spent on revenue-generating activities.
Whether you’re crossing economic nexus thresholds in Arizona, adjusting to Gilbert’s new rates, or managing filing requirements across multiple jurisdictions, professional support eliminates guesswork and prevents expensive mistakes.
Contact us today to discuss your sales tax needs or schedule a free consultation. Let us handle the tax so you can focus on sales.
Want to learn more? Get our “10 Sales Tax Mistakes E-Commerce Sellers Make” e-book.
Frequently Asked Questions
What is the current sales tax rate in Gilbert, AZ?
The combined sales tax rate in Gilbert is 8.3% as of January 1, 2025: 5.6% Arizona state tax, 0.7% Maricopa County tax, and 2.0% Gilbert town tax.
When did Gilbert’s sales tax increase take effect?
Gilbert’s sales tax increase took effect January 1, 2025, which is the first increase since 2000.
Do I need to collect sales tax on online sales to Gilbert customers?
If you exceed $100,000 in gross retail sales to Arizona customers in the current or previous calendar year, you must register for Arizona TPT and collect tax on Gilbert sales, even without physical presence.
Are groceries taxed in Gilbert?
No. Food for home consumption is exempt from Arizona state and local sales tax. Prepared food, restaurant meals, and certain items like alcohol remain taxable.
