Taxes in Tucson, AZ: Sales, Income, and Property Rates

Taxes in Tucson, Arizona come from three places: the state, Pima County, and the city. On most purchases you pay a combined 8.7% transaction privilege tax (5.6% state, 0.5% county, 2.6% city).¹ Income is taxed at Arizona’s flat 2.5% rate, with no separate city income tax. Property owners pay through Pima County under a system that caps how fast your taxable value can rise. Visitors and a few specific purchases carry extra charges on top.

Sales Tax on What You Buy

Arizona’s sales-type tax is called the transaction privilege tax because it technically taxes the seller’s right to do business, but shoppers see it on the receipt like any sales tax. In Tucson the combined rate is 8.7%, and it applies to most retail goods, restaurant meals, telecommunications, and utilities.²

Groceries get a real break. Food for home consumption is exempt from the state’s 5.6% share, and Tucson participates in the state’s municipal rate reduction program, so the city’s 2.6% doesn’t apply either. The exemption covers most unprepared food from a grocery store. It does not cover hot prepared items, candy, carbonated drinks, or food meant to be eaten on-premises. Restaurant meals are fully taxed at 8.7%.

Online and Out-of-State Purchases

When an out-of-state seller doesn’t collect Arizona tax, you owe a matching use tax yourself at the same 8.7% combined rate. This comes up most often with purchases from smaller online sellers or things you bought while traveling. The Department of Revenue audits for compliance, and unpaid use tax draws penalties and interest.³ Large marketplaces like Amazon generally collect for you; the gap tends to be smaller independent retailers.

State Income Tax (There Is No City Income Tax)

Tucson has no local income tax. Your paycheck withholding and your April filing are state and federal only. Arizona uses a flat 2.5% rate on all taxable income, no matter the amount, which took effect in 2023.⁴

Residents file Form 140 (or the shorter 140A or 140EZ) with the Arizona Department of Revenue.⁵ Returns for the 2025 tax year are due April 15, 2026. Full-year residents owe Arizona tax on all income, including earnings from other states.

Credits That Cut the Bill

Arizona offers dollar-for-dollar credits that reduce what you owe rather than just your taxable income. Two are widely used because they let you redirect part of your tax bill to a cause you choose:

Public school credit: up to $200 for single filers or $400 for joint filers for donations to Arizona public schools that fund extracurricular activities.⁶
Charitable organization credit: up to $506 single or $1,009 joint in 2026 for contributions to qualifying charitable organizations. No need to itemize.

Both credits are nonrefundable, so they can zero out your bill but won’t generate a refund on their own. At the 2.5% flat rate, a married couple earning $100,000 owes roughly $2,500 before credits, so combining these two can cut the bill by more than half.

Property Tax Through Pima County

Property taxes in Tucson are assessed and collected by Pima County, not the city. Two valuations drive the bill. The Assessor sets a full cash value (market value) and a limited property value for every property each year. The limited value is what most of your taxes are calculated from, and under Proposition 117, approved by voters in 2012, it can grow no more than 5% per year and can never exceed the full cash value.⁷ That cap is what keeps your bill from spiking when the housing market jumps.

For owner-occupied homes, Arizona applies a 10% assessment ratio to the limited value. If your home’s limited value is $350,000, the assessed value used in the calculation is $35,000, and each overlapping jurisdiction’s tax rate is applied to that number.⁸

Your bill is split into primary taxes, which fund day-to-day operations of the county, city, and school districts, and secondary taxes, which cover voter-approved bonds, budget overrides, and special districts such as Pima Community College and library districts.⁸

When to Pay

The Pima County Treasurer mails tax statements each September and handles collection.⁹ Most bills are payable in two installments:

First half: due October 1, delinquent after November 1.
Second half: due March 1, delinquent after May 1.¹⁰

Delinquent amounts accrue interest at a statutory 16% per year, prorated monthly at about 1.33%.¹⁰ Prolonged delinquency leads to a tax lien sale, and if the owner fails to redeem within the statutory period, the lienholder can eventually move to foreclose.

Appealing Your Valuation

The Assessor mails Notices of Value on or before March 1.¹¹ If you think the value is too high, you have 60 days from that mailing date to file a Petition for Review with the Assessor. Most homeowners pull comparable sales from their neighborhood to make the case; a private appraisal (typically $300 to $1,200 for a home) adds weight.

If the Assessor denies the petition, you can appeal to the county Board of Equalization within 25 days, or skip the Board and file directly in the Arizona Tax Court within 60 days.¹² The Board route is informal and free, which makes it the practical choice for most homeowners. A Board ruling can still be taken to Tax Court within 60 days.

Exemptions and the Senior Freeze

Arizona offers several property tax reductions, but you can claim only one.

Qualifying widows, widowers, and people with a total and permanent disability can exempt up to $4,188 from assessed value for the 2026 tax year, as long as total assessed value does not exceed $28,459.¹³ Prior-year household income must be at or below $34,901, or $41,870 if minor children live in the home. Social Security, VA pensions, workers’ compensation, and unemployment insurance don’t count toward those income limits.

Veterans with a VA-rated service-connected disability can exempt up to $4,873 for 2026, multiplied by their disability percentage, with the property’s total assessed value capped at $36,865.¹³ A 100% rating gets the full amount.

Homeowners 65 or older can apply for a senior valuation freeze that locks in the limited property value against future market increases. At least one owner must be 65+, the home must be the primary residence (occupied at least nine months a year), and the owner must have lived there at least two years. Combined household income cannot exceed $47,712 for a single owner or $59,640 for two or more owners. The freeze continues as long as you keep meeting the requirements.

Hotel, Rental Car, and Marijuana Taxes

Some taxes mostly hit visitors or specific purchases rather than everyday residents.

Effective March 1, 2026, Tucson’s hotel occupational license tax rose from 6% to 9% on rent charged by hotels and RV parks to guests staying fewer than 30 consecutive days, and the same ordinance eliminated the previous $4-per-night bed surtax.¹⁴ Hotel guests also pay the standard 8.7% TPT on the room, bringing the total tax load on a Tucson hotel stay to roughly 17.7% of the room rate.

Rental cars carry a 5% Arizona surcharge on contracts of 180 days or fewer. It applies to the base rental price and certain fees, but excludes state and local taxes already on the transaction.¹⁵¹⁶

Adult-use marijuana carries a 16% state excise tax on top of the 8.7% TPT, bringing recreational cannabis to roughly 24.7% total tax.¹⁷ Medical marijuana pays regular TPT but not the 16% excise, which keeps a real price gap between the two programs for patients with current cards.

If You Run a Business in Tucson

Selling in Tucson means two licenses, not one. The state transaction privilege tax license from the Arizona Department of Revenue costs $12 per location and is applied for through the Joint Tax Application on AZTaxes.gov.¹⁸ State licenses renew annually by January 1, with penalties for anything received after January 31.¹⁹

The City of Tucson requires its own business license: a nonrefundable $25 application fee, a $50 annual license fee (prorated for mid-year starts), and $50 to renew each January 1. Miss the deadline and the late renewal fee rises to $75.²⁰

How often you file TPT returns depends on your estimated annual combined liability: annually under $2,000, quarterly from $2,000 to $8,000, and monthly above $8,000.²¹ Out-of-state sellers must register and collect Arizona TPT once gross retail sales into Arizona reach $100,000 in the current or previous calendar year; sales through a marketplace facilitator that already remits don’t count toward that threshold.

1
Arizona Department of Revenue. Transaction Privilege and Other Tax Rate Tables – January 2026
2
Arizona Department of Revenue. Tucson Transaction Privilege Tax and Use Tax Rates
3
Arizona Department of Revenue. Understanding Use Tax
4
Arizona Department of Revenue. Individual Income Tax Forms
5
Arizona Department of Revenue. Individual Income Tax Information
6
Arizona Department of Revenue. Public School Tax Credit
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Arizona Department of Revenue. Limited Property Value
8
Arizona Department of Revenue. Arizona Property Taxation
9
Pima County. Property Taxes
10
Pima County Treasurer’s Office. Pima County Treasurer’s Office General Information
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Pima County Assessor. Pima County Assessor Home
12
Arizona State Board of Equalization. How to File an Appeal
13
Arizona Legislature. Arizona Code 42-11111 – Exemption for Property Widows and Widowers Persons With a Total and Permanent Disability Veterans With a Disability
14
American Legal Publishing. Tucson Ordinance No 12218
15
Arizona Legislature. Arizona Revised Statutes 28-5810 – Rental Vehicle Surcharge Reimbursement Definition
16
Arizona Department of Transportation. Rental Vehicle Surcharge
17
Arizona Department of Revenue. Adult Use Marijuana
18
Arizona Department of Revenue. Transaction Privilege Tax
19
Arizona Department of Revenue. Prepare Now – Key Steps for 2026 TPT License Renewal
20
American Legal Publishing. Tucson Code – Sec 19-39 Application Fee Annual License Fee Annual Renewal Requirements Penalty
21
Arizona Department of Revenue. TPT Update January 2026