Mesa, AZ Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Governing law
- Mesa City Code, Title 5, Ch. 10, § 5-10-400
- Standard classification rate
- 2.00% of gross income
- Hotel add-on tax
- Additional 5% on transient lodging, § 5-10-447
- Contractor deduction
- 35% deduction, § 5-10-415(B)(2)
- Penalty
- Up to $2,500 fine and/or 6 months jail
- Administering office
- City Tax Collector
Summary
Mesa does not charge one flat business tax rate. Title 5, Chapter 10 imposes a local privilege (sales) tax measured by gross income, and sorts every business into one of roughly eighteen activity-specific classifications, retail, restaurants, contracting, hotels, rentals, utilities and more, each with its own rate, deductions and exemptions under Section 5-10-400 and the sections after it.
(A)There are hereby levied and imposed, subject to all other provisions of this Chapter, the following Privilege Taxes for the purpose of raising revenue to be used in defraying the necessary expenses of the City, such taxes to be collected by the Tax Collector:1.Privilege Tax upon persons on account of their business activities to the extent provided elsewhere in this Article, to be measured by the gross income of persons, whether derived from residents of the City or not or whether derived from within the City or from without...(D)Limitation of exemptions, deductions, and credits allowed against the measure of taxes imposed by this Chapter. All exemptions, deductions, and credits set forth in this Chapter shall be limited to the specific activity or transaction described and not extended to include any other activity or transaction subject to the tax.
Official source re-checked September 7, 2026: no newer edition of the code had been published (publisher’s edition: Code of Ordinances: Supplement 22).
Full Breakdown
Section 5-10-400 imposes the City's privilege tax "upon persons on account of their business activities," measured by gross income, collected by the Tax Collector. Rather than a single citywide rate, Chapter 10 breaks businesses into activity-specific classifications running from Section 5-10-405 through 5-10-485, each carrying its own rate and rules: Advertising (5-10-405), Amusements, Exhibitions and Similar Activities (5-10-410), Construction Contracting (5-10-415), Job Printing (5-10-425), Manufactured Buildings (5-10-427), Timbering and Other Extraction (5-10-430), Publishing and Periodicals Distribution (5-10-435), Hotels (5-10-444), Rental of Real Property (5-10-445), Rental of Tangible Personal Property (5-10-450), Restaurants and Bars (5-10-455), Retail Sales (5-10-460), Telecommunication Services (5-10-470), Transporting for Hire (5-10-475), Utility Services (5-10-480) and Wastewater Removal Services (5-10-485) among them.
00% of gross income from that specific activity. Hotels additionally owe a separate 5% tax on transient lodging income under Section 5-10-447, stacked on top of the 2% hotel classification tax under 5-10-444. Construction contractors get a 35% deduction against otherwise-taxable gross income under 5-10-415(B)(2), and a subcontractor working under a general contractor who has declared tax liability and provided a City Privilege License number is exempt from the tax entirely under 5-10-415(C). " Businesses register for a Privilege License coded to the correct classification before collecting or reporting activity-based tax; misclassifying income under the wrong section, or omitting it altogether, is what the City's tax audits are built to catch.
Violations & Fines
Violating any Chapter 10 tax provision is a misdemeanor under Section 5-10-2: a fine up to $2,500, imprisonment up to six months, or both, for a conviction, with each calendar day a violation continues counted as a separate offense under the Chapter's general penalty scheme. The Tax Collector audits gross income reported by classification and can assess back taxes, penalties and interest for misclassified or unreported activity.
Frequently Asked Questions
How many business tax classifications does Mesa use?
What tax rate applies to most Mesa businesses?
What happens if a business misclassifies its income?
Are subcontractors taxed separately from general contractors?
Sources & Official References
Other rules in Mesa
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