Arizona: Sales Tax Handbook
What purchases are exempt from the Arizona sales tax?
While the Arizona sales tax of 5.6% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Arizona.
Sales Tax Exemptions in Arizona
In Arizona, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.
Some examples of exceptions to the sales tax are certain types of groceries, some medical devices, certain prescription medications, and any machinery and chemicals which are used in research and development.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Arizona:
Clothing
5.6%
Groceries
EXEMPT
Prepared Food
5.6%
Prescription Drugs
EXEMPT
OTC Drugs
5.6%
These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Candy IS considered a grocery in Arizona
Soda IS considered a grocery in Arizona
Are services, shipping, installation, etc taxable in Arizona?
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Arizona sales tax see the Arizona sales taxability FAQ page.
Other tax-exempt items in Arizona
This table lists a number of additional categories of goods and services that are exempt from Arizona's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Arizona.
| Category | Exemption Status |
|---|---|
| Food and Meals | |
| Grocery Food | EXEMPT |
| Manufacturing and Machinery | |
| Machinery | EXEMPT * |
| Raw Materials | EXEMPT * |
| Medical Goods and Services | |
| Medical Devices | EXEMPT * |
| Medical Services | EXEMPT |
| Occasional Sales | |
| General Occasional Sales | EXEMPT * |
| Motor Vehicles | EXEMPT |
| Optional Maintenance Contracts | |
| General Optional Maintenance Contracts | EXEMPT * |
| Services | |
| Janitorial Services | EXEMPT |
| Software and Digital Products | |
| Custom Software - Delivered on Tangible Media | EXEMPT |
| Custom Software - Downloaded | EXEMPT |
| Trade-Ins | |
| General Trade-Ins | EXEMPT |
| Vending Machine Sales | |
| Food | EXEMPT * |
* See notes in category taxability page for details
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