Phoenix, AZ Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Advertising rate
- 0.5% of gross income
- Amusements rate
- 2.8% of gross income
- Construction contracting rate
- 2.8% of gross income
- Retail sales rate
- 2.3% of gross income
- Administering office
- City Tax Collector
Summary
Phoenix taxes businesses under its privilege (sales) tax by specific activity classification, each with its own rate set in City Code Article IV.
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. A 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.
2. A privilege tax upon certain persons for the privilege of occupancy of real property, in accordance with the provisions of Section 14-440.
3. A privilege tax upon persons for the privilege of selling jet fuel, whether derived from residents of the City or not, or whether derived from within the City or from without, in accordance with the provisions of Section 14-422.
b. Taxes imposed by this chapter are in addition to others. Except as specifically designated elsewhere in this chapter, each of the taxes imposed by this chapter shall be in addition to all other licenses, fees, and taxes levied by law, including other taxes imposed by this chapter.
c. Presumption. For the purpose of proper administration of this chapter and to prevent evasion of the taxes imposed by this chapter, it shall be presumed that all gross income, or gallons sold, is subject to the tax until the contrary is established by the taxpayer.
Official source re-checked September 8, 2026: no newer edition of the code had been published (publisher’s edition: current through Ordinance G-7524, passed June 17, 2026).
Full Breakdown
Phoenix does not use a flat business tax rate. City Code § 14-400 imposes a privilege tax on gross income from business activities "to the extent provided elsewhere in this article," and Article IV then rates each classification separately: advertising at 0.5%, amusements/exhibitions at 2.8%, construction contracting at 2.8%, retail sales at 2.3%, restaurants and bars, hotels, rental of real and personal property, telecommunications, and utility services each carry their own listed rate and classification-specific exemptions. A business must identify which classification its activity falls under to compute the correct tax and file with the Tax Collector.
Violations & Fines
Misclassifying a business activity, or failing to remit the classification-specific privilege tax, exposes the taxpayer to assessment, penalties, and interest under the Tax Collector's audit and collection authority in Chapter 14.
Frequently Asked Questions
Does Phoenix have one flat business tax rate?
Where is the classification scheme defined?
Sources & Official References
Other rules in Phoenix
Compare Phoenix to another location·View the Arizona local taxes & fees overview
See something wrong?
Help us keep this page accurate. If you notice an error or outdated information, let us know.
Business Tax Classification in Nearby Cities
How other cities in Maricopa County handle business tax classification.