Scottsdale, AZ Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Governing tax code
- Scottsdale Tax Code Art. IV
- Typical classification rate
- 1.70% of gross income
- License required before
- Engaging in taxable activity
- License notice deadline
- 30 days for changes
- Late-filing penalty
- 5%/month, capped 25%
- Fraud/evasion penalty
- 50% of deficiency
Summary
Scottsdale Tax Code § 400 imposes a privilege tax measured by gross income on every business activity classified under Article IV, from retail and restaurants to construction contracting and advertising. Businesses must first obtain a Tax Collector-issued transaction privilege and use tax license under Sec. 300 before engaging in a taxable activity.
(a)Privilege taxes levied and imposed. 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 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...(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 7, 2026: no newer edition of the code had been published (publisher’s edition: Code of Ordinances: Supplement 80).
Full Breakdown
Sec. 400(a)(1) levies a privilege tax on persons for their business activities, measured by gross income regardless of whether that income comes from City residents or is earned inside or outside Scottsdale; subsection (c) presumes all gross income is taxable until the taxpayer proves otherwise. The tax is administered classification by classification under Article IV: Sec. 405 taxes local advertising, Sec. 410 taxes amusements and exhibitions, Sec. 415-417 tax construction contracting, Sec. 444 taxes hotels, Sec. 445 taxes real property rental and leasing, Sec. 455 taxes restaurants and bars (including catering and cover charges), and Sec.
460 taxes retail sales of tangible personal property. 70 percent rate on gross income, though the rate for a given classification is set independently in its own section and has changed by ordinance over time, most recently effective July 1, 2025 under Ord. No. 4676. Before engaging in any taxable activity, Sec. 300(a) requires a business to apply to the Tax Collector for a transaction privilege and use tax license; a business that operates more than one classification at a single location does not need a separate license for each activity but must list every category on its application, per Sec.
300(c). Licensees must notify the Tax Collector of any change in business activity, location or mailing address within 30 days under Sec. 300(d). Casual, non-recurring sales, such as a garage sale or the sale of a personal vehicle, are exempt from the license requirement if conducted no more than three times a year under Sec. 300(f).
Violations & Fines
A taxpayer who misses the delinquency date under Sec. 530 owes interest under Sec. 540(a) at the federal short-term rate plus 3 percentage points, compounded annually. Sec. 540(b) layers on civil penalties: 5 percent of the tax per month late-filed (capped at 25 percent), 10 percent for late payment, 25 percent for ignoring a Tax Collector demand, and up to 50 percent for a deficiency caused by civil fraud or evasion.
Frequently Asked Questions
Does Scottsdale require a separate business license for each activity?
What tax rate applies to a Scottsdale retail or restaurant business?
What happens if a Scottsdale business files its privilege tax return late?
Are garage sales subject to Scottsdale's business tax license?
Sources & Official References
Other rules in Scottsdale
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