Businesses operating in Scottsdale need to understand more than a single sales tax percentage. Arizona sales tax uses a transaction privilege tax (TPT) system, and the rate a business owes can depend on what it sells or the type of activity it conducts.
What is Scottsdale sales tax?
Since the state uses TPT, the combined tax rate for many Scottsdale businesses is 8%. Other activities have different rates, while certain products and services receive different tax treatment.
Here is what businesses should know about Scottsdale sales tax, including current rates, taxable sales, licensing, filing requirements, and considerations for expansion.
How Arizona transaction privilege tax works
Arizona calls its sales tax a transaction privilege tax, or TPT. Unlike a traditional sales tax imposed directly on the purchaser, TPT is a tax on the seller for conducting certain types of business in Arizona.
Businesses can pass the cost of TPT on to customers, but the business remains responsible for reporting and paying the tax.
Arizona administers state, county and participating city TPT through the Arizona Department of Revenue. Scottsdale businesses therefore generally report their applicable state, Maricopa County and Scottsdale taxes through Arizona’s centralized TPT system rather than making separate payments to each jurisdiction.
Scottsdale sales tax rates at a glance
For many common taxable business activities, the combined Scottsdale, Arizona sales tax rate is 8%. That total is made up of:
- Arizona state tax: 5.6%
- Maricopa County tax: 0.7%
- Scottsdale city tax: 1.7%
Scottsdale’s city transaction privilege tax rate decreased to 1.7% effective July 1, 2025.
The 8% combined rate applies to common classifications such as retail sales and restaurants. Not every taxable transaction in Scottsdale carries the same rate, however. The amount can vary based on the business activity or type of sale.
| Tax category | Scottsdale rate |
|---|---|
| Retail sales | 8.0% combined |
| Restaurants and bars | 8.0% combined |
| Food for home consumption | 1.7% city tax |
| Use tax | 7.1% combined state and city |
Hotel and motel stays of less than 30 days can be subject to additional tax. Scottsdale imposes a transient lodging tax, around 5%, in addition to its general city TPT. When applicable taxes are combined, the total tax rate on a lodging stay may be around 14%. Stays of 30 days or longer may be exempt from the transient lodging tax when applicable requirements are met. Businesses should verify the rate that applies to their particular location and business classification before collecting tax.
Taxable products in Scottsdale
Retail sales of tangible personal property are generally subject to Arizona TPT unless a specific exemption or deduction applies.
For a typical taxable retail sale in Scottsdale, the combined rate is 8%. This can apply to merchandise sold by stores and other businesses making taxable retail sales within the city.
Arizona law provides exemptions and deductions for certain transactions, so businesses should determine the tax treatment of the products they sell rather than automatically applying the standard rate to every sale.
Is food taxable in Scottsdale?
Food receives special treatment. Food sold for home consumption is exempt from Arizona state and Maricopa County TPT, but Scottsdale imposes its 1.7% city tax on qualifying food for home consumption.
Prepared food sold by restaurants is treated differently. Scottsdale’s restaurant classification generally carries the standard 8% combined rate, consisting of state, county and city taxes.
Restaurants, cafés and similar businesses should distinguish qualifying food for home consumption from prepared meals when determining the appropriate tax treatment.
Make your sales tax less taxing with DAVO.
Scottsdale tax treatment of services
Arizona does not broadly tax every service in the same way it taxes retail sales. Instead, TPT applies to specific classifications of business activity.
Many standalone professional services fall outside the retail TPT classification. Certain professional-service charges and services where tangible personal property is only incidental to the service may also receive different treatment from ordinary retail sales.
TPT can apply to business activities such as:
- Restaurants and bars
- Commercial leasing
- Amusements
- Personal property rentals
- Certain contracting activities
- Transportation
- Utilities
- Telecommunications
The tax treatment can also depend on how a service relates to a retail sale. Businesses that provide services while also selling tangible personal property should determine which portions of the transaction are taxable and maintain records supporting any deductions they claim.
Businesses with mixed product and service revenue should avoid assuming that every charge on an invoice receives the same tax treatment.
TPT licensing requirements for Scottsdale businesses
Businesses conducting activities subject to Arizona TPT generally need a TPT license from the Arizona Department of Revenue. A license may be required for businesses engaged in activities such as:
- Retail sales
- Restaurant and bar sales
- Commercial leasing
- Personal property rentals
- Certain contracting activities
- Other taxable business classifications
Businesses can apply through the Arizona Department of Revenue. Scottsdale uses the state’s centralized system for reporting applicable state, county, and city TPT.
A company opening a Scottsdale location should review its licensing requirements before beginning taxable business activity. Businesses with multiple locations should also make sure each location is properly reflected in their TPT registration and reporting setup.
Online sales and Scottsdale TPT
Online sellers may have Arizona TPT obligations even when they do not have a physical storefront in Scottsdale.
A business with a physical presence in Arizona generally needs to register for TPT when it conducts taxable activity in the state. Remote sellers without a physical presence can also become subject to Arizona TPT if they exceed the state’s economic nexus threshold.
Arizona’s remote seller threshold is currently $100,000 in annual gross sales into the state.
Marketplace sales may work differently. When a transaction is handled through a qualifying marketplace facilitator, the marketplace may be responsible for collecting and remitting TPT on sales it facilitates.
Businesses that sell through both their own website and third-party marketplaces should keep those sales channels clearly separated in their records because the tax responsibility may differ.
Filing and remitting Scottsdale sales tax
Scottsdale TPT is reported through the Arizona Department of Revenue along with applicable state and county taxes.
Businesses are assigned a filing frequency based on their estimated annual combined Arizona, county, and municipal TPT liability:
- Annual: less than $2,000 in estimated annual tax liability
- Quarterly: $2,000 to $8,000
- Monthly: more than $8,000
TPT returns are due on the 20th day of the month following the applicable reporting period. If the 20th falls on a weekend or holiday, the due date moves to the next business day. Arizona provides later dates by which paper or electronic returns and payments must be received to be considered timely, so businesses should check the Arizona Department of Revenue’s current filing calendar for the exact deadline that applies to their filing method.
Businesses also need to file required returns for periods with no taxable activity. A zero-dollar return may still be required rather than simply skipping the filing period.
A growing business should monitor its filing frequency as its tax liability changes because it may move from annual to quarterly or monthly reporting.
Understanding Scottsdale use tax
Use tax can apply when a business purchases or rents taxable property for use in Scottsdale without paying an equivalent transaction privilege or sales tax to the seller.
Scottsdale’s city use tax rate is 1.5%. When Arizona’s 5.6% state use tax is added, the combined state and Scottsdale city use tax rate is 7.1%.
For example, a Scottsdale business may purchase taxable equipment or supplies from an out-of-state seller that does not collect the applicable tax. Depending on the transaction, the business may then be responsible for reporting use tax.
Businesses should review untaxed purchases rather than assuming that a lack of tax at checkout means no tax is due.
Keeping Scottsdale sales tax rates current
Sales tax settings can be easy to overlook after they are entered into a POS system. Rates and rules can change, however, and Scottsdale provides a recent example.
The city’s general TPT rate changed from 1.75% to 1.7% on July 1, 2025, affecting the combined rate businesses use for many transactions.
Businesses should periodically verify their tax settings and understand how sales tax per state can vary, particularly when:
- Opening a new location
- Adding new products or services
- Changing POS systems
- Expanding into online sales
- Entering another city or state
- Receiving notice of a tax rate change
Accurate tax collection is only one part of compliance. Businesses also need to report taxable sales correctly, meet filing deadlines, and make sure the money collected remains available when payment comes due.
Help automate Scottsdale sales tax with DAVO
Collecting TPT throughout the day is only the beginning of the sales tax process. Businesses also need to keep the funds available, prepare returns, and make payments according to their assigned filing schedule.
DAVO by Avalara connects with supported POS systems and uses sales data to set aside collected sales tax daily. When the tax is due, DAVO automatically files the return and pays the amount owed using the funds it has set aside, all backed by the DAVO Guarantee.
That can help Scottsdale restaurants and other eligible businesses spend less time managing sales tax deadlines and reduce the risk of collected tax being used for other business expenses. See how DAVO can automate your sales taxes and get started today.
Frequently asked questions
Do I need to collect Scottsdale sales tax if I sell at a temporary event?
Vendors making taxable sales at fairs, festivals, or other temporary events in Arizona generally need a TPT license. In some cases, an event promoter may collect and remit TPT on behalf of participating vendors, so sellers should confirm how the event is structured.
Are resale purchases subject to Scottsdale sales tax?
Tangible personal property purchased for resale in the buyer’s regular course of business can qualify for a TPT deduction. Arizona uses Form 5000A, the Arizona Resale Certificate, to document qualifying resale purchases.
Are tips and gratuities taxable at Scottsdale restaurants?
Qualifying gratuities can be excluded from taxable restaurant gross income when they are separately stated and meet Arizona’s requirements. Restaurants should review mandatory service charges carefully because their tax treatment depends on how the charge is structured and distributed.
Does Scottsdale sales tax apply to marketplace sales?
A qualifying marketplace facilitator may be responsible for collecting and remitting Arizona TPT on sales it facilitates. Businesses that also make direct sales should track those transactions separately because their own collection and filing responsibilities may differ.
Can a business make tax-exempt sales in Scottsdale?
Certain transactions can qualify for Arizona TPT exemptions or deductions when the applicable requirements are met. Businesses should obtain and retain the appropriate exemption or resale documentation to support the tax treatment they claim.
Is Scottsdale sales tax based on the business location or customer location?
The TPT rate that applies to an Arizona sale can depend on the business activity and Arizona sourcing rules, so businesses should not automatically use the Scottsdale rate for every transaction. Companies expanding into other markets should likewise verify local rules separately, including the applicable Las Vegas sales tax requirements for Nevada locations.
Do Scottsdale businesses still need to file if they had no taxable sales?
Yes. Arizona requires businesses with an active TPT filing requirement to file a return for each reporting period even when they had no sales or tax due.
What records should Scottsdale businesses keep for TPT purposes?
Businesses should keep records supporting their reported sales, deductions, and exemptions, such as invoices, receipts, exemption certificates, and marketplace records. Arizona generally requires TPT records to be kept for four years from the return’s due date or filing date, whichever is later.
