Scottsdale Sales Tax 2024: Rates & Info

Aug 21, 2024 | Sales Tax

Scottsdale sales tax in 2024 includes both city and state taxes, impacting businesses and consumers alike. The combined rate consists of Scottsdale’s municipal tax and Arizona’s state tax, which can vary depending on the type of goods or services. Businesses must stay compliant by tracking these changes and filing taxes correctly. 

With constant updates to tax regulations, it’s crucial to stay informed. Hands Off Sales Tax helps Scottsdale businesses navigate these complexities, offering expert assistance to ensure you’re always in compliance, saving you time and potential penalties.

What is Sales Tax?

Sales tax is a government-imposed levy on the sale of goods and services. It is collected by retailers from consumers at the point of sale and remitted to the relevant government authority. Sales tax is typically a percentage of the sales price of the taxable items or services. The purpose of this tax is to generate revenue for public services such as schools, infrastructure, public safety, and more.

In the United States, sales tax is not standardized at the federal level. Instead, each state has the authority to set its own sales tax rates, and in some cases, local governments (such as cities or counties) may impose additional sales taxes. This leads to a wide variation in sales tax rates across the country, with some areas having no sales tax at all, while others have rates as high as 10%.

In Scottsdale, Arizona, sales tax is an important source of revenue for the city. Known locally as the Transaction Privilege Tax (TPT), it is levied on the seller rather than the buyer, but the cost is typically passed on to the consumer. The TPT applies to a broad range of transactions, including retail sales, rentals, construction, and certain services. However, there are some exemptions, which we’ll discuss later.

The TPT in Scottsdale is critical for funding city projects such as road improvements, parks, public safety initiatives, and other essential services. The tax helps maintain the quality of life for Scottsdale residents, making the city an attractive place to live, work, and visit.

Scottsdale Sales Tax Rates in 2024

For 2024, the sales tax rate in Scottsdale is a combination of the Arizona state sales tax and Scottsdale’s city sales tax. Here’s the breakdown:

  • Arizona State Sales Tax: 5.6%
  • Scottsdale City Sales Tax: 1.75%
  • Total Sales Tax Rate: 7.35%

The state of Arizona levies a 5.6% sales tax across the state. This is known as the Transaction Privilege Tax (TPT), and it applies to most types of business activities, including retail sales, construction, and services. In Scottsdale, the city adds an additional 1.75% on top of the state rate, resulting in a total sales tax rate of 7.35%.

This rate applies to most retail purchases made within the city, but there are certain categories of goods and services that may have different rates or be exempt from sales tax altogether, as we’ll explore later in this article.

It’s important to note that sales tax rates can vary depending on the type of transaction. For example, the tax rate for restaurant dining or hotel accommodations may be different from the general sales tax rate. Businesses in Scottsdale must be aware of the applicable tax rates for their industry and ensure they are collecting the correct amount of tax from customers.

Scottsdale City Sales Tax vs. Arizona State Tax

The Scottsdale city sales tax and the Arizona state sales tax are two separate components that make up the total sales tax rate in the city. While they are collected together, the revenue from each tax is allocated differently.

  • Arizona State Sales Tax (TPT): This tax is applied uniformly across the state and is used to fund statewide services and infrastructure projects, including education, transportation, and public health. The state sales tax rate is 5.6%, which is relatively moderate compared to other states. This tax is collected by businesses on behalf of the state and is remitted to the Arizona Department of Revenue.
  • Scottsdale City Sales Tax: The city of Scottsdale adds an additional 1.75% to the state sales tax rate. This local tax is used to fund city-specific projects and services, such as road maintenance, parks and recreation, police and fire departments, and other municipal services. The Scottsdale city sales tax is an important source of revenue for maintaining the high quality of life that residents and visitors enjoy.

One key difference between the state and city sales taxes is how the revenue is used. While the state tax supports programs and services that benefit all Arizona residents, the city tax is specifically allocated to Scottsdale’s needs. For example, the city tax helps fund improvements to Scottsdale’s vibrant downtown area, including public art installations, infrastructure upgrades, and public safety enhancements.

For businesses operating in Scottsdale, it’s important to understand that they are responsible for collecting both the state and city sales taxes from customers. These taxes are remitted to the Arizona Department of Revenue, which then distributes the appropriate portion to the city of Scottsdale.

How to Calculate Scottsdale Sales Tax

Calculating Scottsdale sales tax is a simple process once you know the applicable rates. Here’s a step-by-step guide to help you understand how to calculate the total amount of sales tax for a given purchase:

  1. Determine the sales price of the item: Start by identifying the total price of the item or service before sales tax. This is the base price that will be used to calculate the tax.
  2. Identify the applicable sales tax rate: In Scottsdale, the combined sales tax rate is 7.35%, which includes the Arizona state sales tax (5.6%) and the Scottsdale city sales tax (1.75%).
  3. Multiply the sales price by the sales tax rate: Once you have the sales price and the sales tax rate, multiply them to calculate the total sales tax. For example, if you are purchasing an item that costs $100, you would calculate the tax as follows:
    • $100 x 0.0735 (7.35%) = $7.35 The total sales tax for this purchase would be $7.35.
  4. Add the sales tax to the sales price: After calculating the sales tax, add it to the original sales price to get the final total. In this example, the final cost of the item, including sales tax, would be:
    • $100 + $7.35 = $107.35

For businesses, it’s crucial to ensure that the correct sales tax rate is applied to all taxable transactions. This may require updating point-of-sale (POS) systems to reflect any changes in sales tax rates, as well as ensuring that employees are properly trained to apply the tax correctly.

Exemptions from Scottsdale Sales Tax

While many goods and services in Scottsdale are subject to sales tax, there are several important sales tax exemptions that businesses and consumers should be aware of. These exemptions help reduce the tax burden on certain essential items and services, ensuring that they remain affordable for Scottsdale residents.

Here are some common exemptions from Scottsdale sales tax:

  • Groceries: In Scottsdale, groceries for home consumption are exempt from sales tax. This exemption applies to most food items purchased for personal use, such as fruits, vegetables, meat, dairy products, and packaged foods. However, prepared foods and restaurant meals are generally subject to sales tax.
  • Prescription Medications: Prescription drugs are exempt from sales tax in Scottsdale. This exemption helps reduce the cost of essential healthcare items for residents. Over-the-counter medications, however, may still be subject to sales tax.
  • Utilities: Certain utility services, such as electricity, water, and natural gas, are exempt from sales tax for residential use. This exemption ensures that basic utility services remain affordable for households in Scottsdale.
  • Resale Items: Businesses that purchase goods for resale are exempt from sales tax, provided they have a valid resale certificate. This exemption prevents double taxation, as the sales tax is collected when the item is sold to the final consumer.
  • Manufacturing Equipment: Equipment used in the manufacturing process may be exempt from sales tax under certain conditions. Businesses should consult with a tax professional to determine whether their equipment qualifies for this exemption.
  • Nonprofit Organizations: Certain nonprofit organizations may qualify for sales tax exemptions on purchases related to their charitable activities. These exemptions help support the important work of nonprofits in the Scottsdale community.

Understanding these exemptions is essential for both consumers and businesses. Consumers should be aware of the items that are exempt from sales tax to avoid overpaying, while businesses must ensure that they are not mistakenly collecting tax on exempt transactions.

Changes to Scottsdale Sales Tax in 2024

Each year, sales tax laws and rates can change based on local and state government decisions. For 2024, the Scottsdale sales tax rate remains steady at 1.75%, contributing to the overall tax rate of 7.35% when combined with the Arizona state sales tax. However, there are a few notable updates and trends that businesses and consumers should be aware of:

Increased Focus on Digital Goods and Services: 

As more businesses transition to digital platforms, there has been growing attention on the taxation of digital goods and services. While Arizona has not yet fully enacted sales tax on digital products, there is an ongoing discussion about the potential for future taxation in this area. Scottsdale businesses that sell software, cloud services, or digital media should stay informed about any changes to tax laws affecting their industry.

New Online Filing System: 

In 2024, the Arizona Department of Revenue (ADOR) introduced an updated online system for filing sales tax returns. This system is designed to streamline the process for businesses, making it easier to file and pay taxes online. Scottsdale businesses are encouraged to use this system to ensure timely and accurate filings.

Potential for Industry-Specific Tax Adjustments: 

Scottsdale officials have discussed the possibility of adjusting sales tax rates for certain industries, such as short-term rentals or tourism-related businesses. While no official changes have been made for 2024, businesses in these sectors should monitor any potential updates to ensure compliance with future tax rates.

How Scottsdale Sales Tax Compares to Neighboring Cities

When comparing sales tax rates across different cities in Arizona, it’s clear that Scottsdale’s rate is competitive. Here’s a look at how Scottsdale’s 7.35% sales tax rate compares to other cities in the Phoenix metropolitan area:

  • Phoenix: Phoenix has a total sales tax rate of 8.6%, which is higher than Scottsdale’s rate. This includes the state rate of 5.6% and a local Phoenix rate of 3%.
  • Tempe: Tempe’s combined sales tax rate is 8.1%, also higher than Scottsdale’s. The city of Tempe adds 2.5% to the state rate.
  • Mesa: Mesa has a total sales tax rate of 8.3%, with a local tax rate of 2.7% on top of the state tax.
  • Chandler: Chandler’s total sales tax rate is 7.8%, slightly higher than Scottsdale’s, with a local rate of 2.2%.

Scottsdale’s relatively lower tax rate makes it an attractive location for both businesses and consumers. While the difference in tax rates may seem small, over time, these savings can add up, especially for businesses making large purchases or for residents who frequently shop within the city. Additionally, the revenue generated from Scottsdale’s sales tax supports local infrastructure and services, ensuring that the city remains a desirable place to live and work.

How to File and Pay Scottsdale Sales Tax

Filing and paying sales tax in Scottsdale is a critical responsibility for businesses operating within the city. Failure to properly file and pay taxes can result in penalties, interest charges, and even legal action. To help ensure compliance, here’s a step-by-step guide for businesses on how to file and pay Scottsdale sales tax:

  1. Obtain a Transaction Privilege Tax (TPT) License: Before a business can begin collecting sales tax, it must obtain a TPT license from the Arizona Department of Revenue (ADOR). This license authorizes the business to collect and remit sales tax on taxable transactions. The license can be obtained online through the ADOR website.
  2. Track Sales Tax Collections: Once a business begins operating in Scottsdale, it must track all sales tax collected on taxable transactions. This includes both the 5.6% Arizona state sales tax and the 1.75% Scottsdale city sales tax. Businesses should use point-of-sale (POS) systems that automatically calculate the correct sales tax for each transaction to ensure accuracy.
  3. File Sales Tax Returns: Depending on the volume of sales, businesses in Scottsdale may be required to file sales tax returns either monthly, quarterly, or annually. The ADOR offers an online portal where businesses can file their returns and report the amount of sales tax collected. It’s important to file returns on time to avoid penalties.
  4. Remit Sales Tax Payments: After filing the sales tax return, businesses must remit the collected sales tax to the ADOR. Payments can be made electronically through the ADOR’s website. The ADOR then distributes the appropriate portion of the tax to the city of Scottsdale.
  5. Keep Accurate Records: Businesses are required to maintain detailed records of all sales and sales tax collections. These records should be kept for at least four years in case of an audit by the ADOR. Accurate record-keeping is essential for ensuring that the correct amount of tax is being collected and remitted.
  6. Consult a Tax Professional: Sales tax laws can be complex, and businesses may benefit from consulting with a tax professional to ensure compliance. A tax advisor can help businesses understand their obligations, avoid common pitfalls, and take advantage of any available exemptions or deductions.

By following these steps, businesses in Scottsdale can ensure that they are in compliance with local and state tax laws. Filing and paying sales tax on time helps businesses avoid costly penalties and ensures that the city has the revenue it needs to provide essential services.

Stay Compliant with Scottsdale Sales Tax in 2024

Ensuring you stay updated on Scottsdale sales tax rates and exemptions is crucial for both businesses and individuals. By following the latest changes, you can avoid costly penalties and keep your finances in order. 

If managing sales tax seems overwhelming, let Hands Off Sales Tax handle it for you. They offer expert tax solutions that simplify compliance, allowing you to focus on growing your business. Trust the experts at Hands Off Sales Tax to keep your tax affairs in check while you focus on what matters most.

Frequently Asked Questions

What is the current Scottsdale sales tax rate in 2024?

The total sales tax rate in Scottsdale for 2024 is 7.35%, which includes the Arizona state tax of 5.6% and the Scottsdale city tax of 1.75%.

Are groceries taxed in Scottsdale?

No, groceries for home consumption are exempt from Scottsdale sales tax. However, prepared food and meals from restaurants are taxable.

How do I calculate sales tax on a purchase in Scottsdale?

To calculate Scottsdale sales tax, multiply the sales price by 7.35%. For example, on a $100 item, the sales tax would be $7.35, making the total cost $107.35.

What items are exempt from Scottsdale sales tax?

Common exemptions include groceries, prescription medications, certain utilities for residential use, and resale items bought by businesses with a valid resale certificate.

How often do businesses need to file Scottsdale sales tax returns?

Depending on the volume of sales, businesses may need to file sales tax returns monthly, quarterly, or annually through the Arizona Department of Revenue.