Arizona Contractor Sales Tax 2026

Arizona sales tax for contractors 2026. Labor taxable? Materials? Real rules from state revenue department.

Arizona sales tax rate for contractors

  • Combined rate: 5.6% + local (~8.4% combined avg)
  • Construction labor taxable: PARTIALLY - depends on contract type
  • Tax authority: Arizona Department of Revenue

How Arizona treats contractor labor

Prime contractors collect TPT (Transaction Privilege Tax) on 65% of gross receipts. MRRA contractors pay tax on materials at purchase.

Arizona-specific rules

Arizona TPT system is unique. Prime contracting: 65% of gross receipts taxable. MRRA: tax-paid materials at purchase. Election rules can save thousands.

Arizona mechanics lien rights

Beyond sales tax, Arizona contractor billing must respect the mechanics lien deadline of 120 days from completion (or 60 days after notice of completion). Preliminary notice: 20-day preliminary notice REQUIRED for all parties not in direct contract with owner.

Arizona contractor licensing

Arizona Registrar of Contractors (ROC) - required for licensed work. $480 application + exam. Board: https://roc.az.gov.

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Arizona contractor resources by trade