Arizona Revised Statutes

Ariz. Rev. Stat. § 42-5010 (2026)

Rates; distribution base

✓ current as of May 2026

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42-5010. Rates; distribution base

(Caution: 1998 Prop. 105 applies)

A. The tax imposed by this article is levied and shall be collected at the following rates:

1. Five percent of the tax base as computed for the business of every person engaging or continuing in this state in the following business classifications described in article 2 of this chapter:

(a) Transporting classification.

(b) Utilities classification.

(d) Pipeline classification.

(e) Private car line classification.

(f) Publication classification.

(g) Job printing classification.

(h) Prime contracting classification.

(i) Amusement classification.

(j) Restaurant classification.

(k) Personal property rental classification.

(l) Retail classification and amounts equal to retail transaction privilege tax due pursuant to section 42-5008.01.

2. Five and one-half percent of the tax base as computed for the business of every person engaging or continuing in this state in:

(a) The transient lodging classification described in section 42-5070.

(b) The online lodging marketplace classification described in section 42-5076 who has entered into an agreement with the department to register for, or has otherwise obtained from the department, a license to collect tax pursuant to section 42-5005, subsection L.

3. Three and one-eighth percent of the tax base as computed for the business of every person engaging or continuing in this state in the mining classification described in section 42-5072.

4. Zero percent of the tax base as computed for the business of every person engaging or continuing in this state in the commercial lease classification described in section 42-5069.

B. Except as provided by subsections J and K of this section, twenty percent of the tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (a) through (h) of this section is designated as distribution base for the purposes of section 42-5029.

C. Except as provided by subsection K of this section, forty percent of the tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (i) through (l) of this section is designated as distribution base for the purposes of section 42-5029.

D. Thirty-two percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 3 of this section is designated as distribution base for the purposes of section 42-5029.

E. Fifty-three and one-third percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 4 of this section is designated as distribution base for the purposes of section 42-5029.

F. Fifty percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 2 of this section is designated as distribution base for the purposes of section 42-5029.

G. In addition to the rates prescribed by subsection A of this section, if approved by the qualified electors voting at a statewide general election, an additional rate increment is imposed and shall be collected through June 30, 2021. The taxpayer shall pay taxes pursuant to this subsection at the same time and in the same manner as under subsection A of this section. The department shall separately account for the revenues collected with respect to the rates imposed pursuant to this subsection and the state treasurer shall distribute all of those revenues in the manner prescribed by section 42-5029, subsection E. The rates imposed pursuant to this subsection shall not be considered local revenues for purposes of article IX, section 21, Constitution of Arizona. The additional tax rate increment is levied at the rate of six-tenths of one per cent of the tax base of every person engaging or continuing in this state in a business classification listed in subsection A, paragraph 1 of this section.

H. Any increase in the rate of tax that is imposed by this chapter and that is enacted by the legislature or by a vote of the people does not apply with respect to contracts entered into by prime contractors or pursuant to written bids made by prime contractors on or before the effective date of the legislation or the date of the election enacting the increase. To qualify for the exemption under this subsection, the prime contractor must maintain sufficient documentation, in a manner and form prescribed by the department, to verify the date of the contract or written bid.

I. For taxpayers that are taxable under this chapter other than prime contractors taxable pursuant to section 42-5075:

1. Any increase in the rate of tax that is levied by this article or article 2 of this chapter enacted by the legislature or by a vote of the people does not apply for a period of one hundred twenty days after the date of the tax rate increase to the gross proceeds of sales or gross income from the business of the taxpayer with respect to written contracts entered into before the effective date of the tax rate increase unless the taxpayer has entered into a contract that contains a provision that entitles the taxpayer to recover from the purchaser the amount of the additional tax levied.

2. The provisions of this subsection apply without regard to the accounting method used by the taxpayer to report the taxes imposed under article 2 of this chapter.

3. The provisions of this subsection shall not be considered in determining the rate of tax imposed under chapter 6, article 3 of this title.

J. Zero percent of the tax revenues that are collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classification listed in subsection A, paragraph 1, subdivision (h) of this section and that are subject to any distribution required by section 42-5032.02 is designated as distribution base for the purposes of section 42-5029 until the total amount subject to distribution pursuant to section 42-5032.02 has reached the maximum amount prescribed by section 42-5032.02, subsection C. Thereafter, twenty percent of the remaining tax revenues is designated as distribution base for the purposes of section 42-5029 as provided by subsection B of this section.

K. Subject to section 48-4238, beginning on October 1, 2025 through December 31, 2055, zero percent of the tax revenues that are collected at the rate prescribed by subsection A, paragraph 1 of this section from persons engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (h), (i), (j) and (l) of this section and that are subject to transmittal required by section 42-5032.03 is designated as distribution base for the purposes of section 42-5029. Beginning January 1, 2056, twenty percent of the remaining tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons engaging in business under the business classification listed in subsection A, paragraph 1, subdivision (h) of this section is designated as distribution base for the purposes of section 42-5029 as provided by subsection B of this section and forty percent of the remaining tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (i), (j) and (l) of this section is designated as distribution base for the purposes of section 42-5029 as provided by subsection C of this section.

Notes of Decisions

Cited in 13 cases (4 in the last 5 years), 1999–2024 · leading case: Rep Andrew Tobin v. Hon Rea, 291 P.3d 983 (Ariz. 2013).

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Rep Andrew Tobin v. Hon Rea, 291 P.3d 983 (Ariz. 2013). · cites it 9× “§ 42-5010(A)(2)-(3), business classifications not listed in § 42-5010(A)(1), would not impact the amount collected under proposed §§ 42-5010(H) or 42-5155(E) and therefore could be changed without requiring an offset.”

S. Pac. Transp. Co. v. State, 44 P.3d 1006 (Ariz. Ct. App. 2002). · cites it 2× “See A.R.S. §§ 42-5010, 42-5061(A) (Supp.2001).”

Walden Books Co. v. Arizona Dep't of Revenue, 12 P.3d 809 (Ariz. Ct. App. 2000). · cites it 2× “” See A.R.S. § 42-5010(A)(l)(m) (Supp. 1999). The tax base equals “the gross proceeds of sales or gross income derived from the business.”

Qwest Dex, Inc. v. Arizona Dep't of Revenue, 109 P.3d 118 (Ariz. Ct. App. 2005). · cites it 2× “A.R.S. § 42-5010. The transaction privilege tax extends to the business of job printing.”

Atkinson Trading Co. v. Shirley, 210 F.3d 1247 (10th Cir. 2000). · cites it 2× “The occupancy taxes authorized in Ariz.Rev.Stat. § 42-5010 and N.M. Stat. Ann.”

Motorola, Inc. v. Arizona Dep't of Revenue, 993 P.2d 1101 (Ariz. Ct. App. 1999). · cites it 2× “§ 42-5155(C); see also A.R.S. § 42-5010(A)(l)(m) (Special Pamphlet 1998).”

Harold Vangilder v. ador/pinal Cnty. (Ariz. 2022). · cites it 18× “Indeed, § 42-6106(B)(1) requires the transportation excise tax be levied on and collected from “each person engaging or continuing in the county in a business taxed under chapter 5, article 1 of this title,” which are the business categories declared taxable by A.R.S. § 42-5010.…”

Dove Mountain v. Ador (Ariz. Ct. App. 2023). · cites it 4× “Because the grocery store chain marked-up the price of merchandise sold in the regular course of business to cover the cost of the "free" merchandise exchanged to redeem the stamps, and the stores received no new revenue when the stamps were redeemed, the supreme court…”

Dove Mountain v. Ador (Ariz. Ct. App. 2023). · cites it 4× “Because the grocery store chain marked-up the price of merchandise sold in the regular course of business to cover the cost of the “free” merchandise exchanged to redeem the stamps, and the stores received no new revenue when the stamps were redeemed, the supreme court…”

Dove Mountain v. Ador (Ariz. 2024). · cites it 3× “A.R.S. § 42-5010(A). As a hotel, Dove Mountain carries the “transient lodging classification,” § 42-5010(A)(2)(a), which “is comprised of the business of operating, for occupancy by transients, a hotel,” A.”

Vangilder v. Pinal Cnty. (Ariz. Ct. App. 2020). · cites it 2× “) (adopting a zero percent rate for commercial lease classification, now codified at A.R.S. § 42-5010(A)(4)). If the legislature sought to prohibit the voters from approving certain types or levels of modification to the county transportation excise tax rate, the legislature…”

Carter Oil v. Ador (Ariz. Ct. App. 2020). · cites it 2× “§ 28-5606(B)(2) (twenty-six cents per gallon excise tax on non-dyed diesel) with A.R.S. § 42-5010(A)(1)(l) and (G) (five and six-tenths percent tax on retail sales).”

Show all 13 citing cases →

— Ariz. Rev. Stat. § 42-5010(A) — 2 cases

Harold Vangilder v. ador/pinal Cnty. (Ariz. 2022). “Indeed, § 42-6106(B)(1) requires the transportation excise tax be levied on and collected from “each person engaging or continuing in the county in a business taxed under chapter 5, article 1 of this title,” which are the business categories declared taxable by A.R.S. § 42-5010.…”

Dove Mountain v. Ador (Ariz. 2024). “A.R.S. § 42-5010(A). As a hotel, Dove Mountain carries the “transient lodging classification,” § 42-5010(A)(2)(a), which “is comprised of the business of operating, for occupancy by transients, a hotel,” A.”

— Ariz. Rev. Stat. § 42-5010(A)(1) — 1 case

Rep Andrew Tobin v. Hon Rea, 291 P.3d 983 (Ariz. 2013). “§ 42-5010(A)(2)-(3), business classifications not listed in § 42-5010(A)(1), would not impact the amount collected under proposed §§ 42-5010(H) or 42-5155(E) and therefore could be changed without requiring an offset.”

— Ariz. Rev. Stat. § 42-5010(A)(1)(l) — 3 cases

Carter Oil v. Ador (Ariz. Ct. App. 2020). “§ 28-5606(B)(2) (twenty-six cents per gallon excise tax on non-dyed diesel) with A.R.S. § 42-5010(A)(1)(l) and (G) (five and six-tenths percent tax on retail sales).”

Dove Mountain v. Ador (Ariz. Ct. App. 2023). “Because the grocery store chain marked-up the price of merchandise sold in the regular course of business to cover the cost of the "free" merchandise exchanged to redeem the stamps, and the stores received no new revenue when the stamps were redeemed, the supreme court…”

Dove Mountain v. Ador (Ariz. Ct. App. 2023). “Because the grocery store chain marked-up the price of merchandise sold in the regular course of business to cover the cost of the “free” merchandise exchanged to redeem the stamps, and the stores received no new revenue when the stamps were redeemed, the supreme court…”

— Ariz. Rev. Stat. § 42-5010(A)(2) — 2 cases

Atkinson Trading Co. v. Shirley, 210 F.3d 1247 (10th Cir. 2000). “The occupancy taxes authorized in Ariz.Rev.Stat. § 42-5010 and N.M. Stat. Ann.”

— Ariz. Rev. Stat. § 42-5010(A)(2)(a) — 3 cases

— Ariz. Rev. Stat. § 42-5010(A)(4) — 2 cases

Vangilder v. Pinal Cnty. (Ariz. Ct. App. 2020). “) (adopting a zero percent rate for commercial lease classification, now codified at A.R.S. § 42-5010(A)(4)). If the legislature sought to prohibit the voters from approving certain types or levels of modification to the county transportation excise tax rate, the legislature…”

— Ariz. Rev. Stat. § 42-5010(A)(l) — 1 case

— Ariz. Rev. Stat. § 42-5010(A)(l)(m) — 2 cases

Walden Books Co. v. Arizona Dep't of Revenue, 12 P.3d 809 (Ariz. Ct. App. 2000). “” See A.R.S. § 42-5010(A)(l)(m) (Supp. 1999). The tax base equals “the gross proceeds of sales or gross income derived from the business.”

Motorola, Inc. v. Arizona Dep't of Revenue, 993 P.2d 1101 (Ariz. Ct. App. 1999). “§ 42-5155(C); see also A.R.S. § 42-5010(A)(l)(m) (Special Pamphlet 1998).”

— Ariz. Rev. Stat. § 42-5010(H) — 1 case

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