Privilege (Sales) Tax

Effective January 1, 2018, the City of Prescott’s transaction privilege (sales) tax rate is increasing from 2% to 2.75%. The tax increase (Proposition 443) was approved by the majority of the qualified voters at the August 29, 2017, and adopted into City Code by Council on November 14, 2017.

Effective January 1, 2017 the City of Prescott is no longer a self-collecting City. The Arizona Department of Revenue (ADOR) is the single point of administration and collection of state, county and municipal transaction privilege tax. Be sure all tax owed to the City of Prescott is reported to ADOR on a separate line under the city region code PR.

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Transaction Privilege Tax (Sales Tax)

All Arizona cities and towns have a transaction privilege tax which is commonly referred to as a sales tax. It is, however, the tax on the privilege of doing business in Arizona and is not a true sales tax. The seller is liable for the tax but may pass the burden of the tax on to the purchaser. It includes but is not limited to taxation of retail sales, construction, residential and commercial rentals, utilities, communications, and amusements.

Each municipality and county sets their own tax rate, therefore the total tax rate varies throughout the state. The transaction privilege tax rate for Prescott is 2.75%. For most business classifications, the combined rate for the State of Arizona and Yavapai County is 6.35%. The total tax rate within the City of Prescott is 9.10%.

The City of Prescott tax rates and business classifications are detailed in this tax chart.

Use Tax

Use tax is levied on the purchase of tangible personal property stored, used or consumed within Prescott City limits, when an equivalent city privilege tax has not been paid. A more detailed explanation of the differences between the privilege and use taxes can be found in the “What are Use Taxes?” brochure.

Tax Code

Resources

CONTACT

  • Budget and Finance
  • Tax and Licensing
  • City Hall

    201 S Cortez St

  • 928-777-1268

FAQ

  • Items sold by Prescott based businesses via the Internet to residents of Arizona are taxable and reported to the City at the 2.75% tax rate. The State would also collect taxes on sales made within Arizona.

  • The tax code does not allow repairs or improvements to be deducted from gross income derived from rental of real property.

  • Yes, if you have a tax license, you must file a report whether you did any business in Prescott or not. To simplify the processing of returns when there has been no activity there is a block to check that indicates no activity. All returns must be signed to validate.

  • Yes it is the responsibility of the business to remit privilege tax on their gross receipts less applicable deductions whether you pass the tax on or not.

  • Yes, the City taxes both the rental of residential and commercial property. The tax rate is 2.75% for all rentals of real property.

  • Yes, at the City tax rate of 2.75%. Both the State of Arizona and Yavapai County do not tax food for home consumption.

  • Yes, the Department of Revenue administers transaction privilege tax licenses for all jurisdictions in Arizona.  The Arizona Department of Revenue’s online application system for licensing, reporting and payment of sales taxes is at www.aztaxes.gov.

  • The combined tax rate for the State of Arizona, Yavapai County, and the City of Prescott for most taxable activities is 9.10%. The combined rate consists of 5.6% for the State, 0.75% for the County and 2.75% for the City of Prescott.

  • 1% is for the General Fund, 1% is for street improvements, and 0.75% goes to the PSPRS unfunded liability.

NEWS

WaterSmart: Drop by Drop Series “Understanding Your Water Bill” presented on Wednesday, July 18 at the Prescott Public Library

Posted on July 12, 2018

The City of Prescott Water Resource Management presents the seventh installment of WaterSmart: Drop by Drop, an interactive education initiative addressing water supply and water conservation. A presentation and factsheet highlighting a different topic each month will be offered in… Read more »

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