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.
For more information about privilege (sales) tax, call the Tax & Licensing Division at 928-777-1268 or email.
- AZtaxes.gov: Online Licensing, Reporting, and Payment of Sales Taxes
- Apply for a City of Prescott Business License
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 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 and Guides
- City of Prescott Privilege & Use Tax Code - 2018 Edition (pdf, 1414.4 kb)
Additional information is detailed in the brochures below:
- Advertising & Publishing (pdf, 57.7 kb)
- Amusements (pdf, 50.3 kb)
- Beauty Salons & Barber Shops (pdf, 45.8 kb)
- Construction Contracting (pdf, 135.5 kb)
- Hotel/Motel Transient Lodging (pdf, 56.9 kb)
- Job Printing (pdf, 47.5 kb)
- Landlords & Property Managers (pdf, 54.5 kb)
- Peddlers & Solicitors (pdf, 51.8 kb)
- Recovery Center (pdf, 45.2 kb)
- Rental, leasing, & licensing for use of tangible personal property (pdf, 46.5 kb)
- Restaurants & Bars (pdf, 59.8 kb)
- Retail Sales (pdf, 57.8 kb)
- Sales of Improved Real Property (pdf, 59.4 kb)
- Special Event Vendors and Sponsors/Promoters (pdf, 56.1 kb)
- Telecommunications (pdf, 116.0 kb)
- Transporting for Hire (pdf, 50.5 kb)
- Brochure: Reporting Tax to Arizona Department of Revenue (pdf, 58.1 kb)
- Residential and Commercial Rental Online Application Tips (pdf, 148.8 kb)
- What are Use Taxes? (pdf, 45.1 kb)
- Q. What is the total tax rate?
- A. 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.
- Q. Does the City of Prescott tax the rental of real property?
- A. Yes, the City taxes both the rental of residential and commercial property. The tax rate is 2.75% for all rentals of real property.
- Q. Is food taxable in Prescott?
- A. Yes, at the City tax rate of 2.75%. Both the State and Yavapai do not tax food for home consumption.
- Q. Do I have to file a tax report if I didn't do any business in Prescott?
- A. Yes if you receive a tax report you have to complete it and return it 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.
- Q. Is there a transaction privilege tax application on line?
- A. Yes, Beginning September 2016, all City tax license applications are consolidated with the State’s online application system at www.aztaxes.gov.
- Q. Do I have to pay privilege tax if I do not charge my customers?
- A. 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.
- Q. Are Internet sales taxable? If so, at what tax rate?
- A. 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.
- Q. Are repair, service installation labor and shipping taxable.
- A. For retail transactions these types of charges are not taxable if the charges are separately stated to the customer and the seller properly accounts for the charges. Contractors who perform labor only for customers are subject to privilege tax less the allowed 35% contracting deduction.
- Q. Where do the city privilege (sales) and use taxes go?
- A. 1% goes to the General Fund, 1% goes to street improvements, and 0.75% goes to the PSPRS unfunded liability fund.