Arizona Ends Rental Tax: Major Savings for Renters Starting January 2025!

Starting January 1, 2025, Arizona renters will see financial relief as the state’s rental tax is officially repealed. Previously, landlords could pass the rental tax—ranging from 1% to over 4%—on to tenants, significantly raising monthly rent bills. This repeal means reduced living costs for thousands of renters across Arizona.

The rental tax, also called the "transaction privilege tax," applied to residential rental properties in certain cities and towns. With its elimination, tenants could save hundreds of dollars annually, depending on their rental amount and location.

While renters are expected to benefit, landlords must adjust their rent structures to comply with the new law. Arizona’s decision to remove the rental tax comes in response to increasing housing affordability concerns amid rising rents statewide. This repeal marks a positive step toward easing financial burdens for tenants while addressing the state’s broader housing challenges.

I have to call out the Arizona Realtors Association, which has put a lot of energy and effort into defeating this law (also called Transaction Privilege Tax or TPT) for at least a couple of years.  The association understood that these tax costs were being passed on to tenants who were not receiving the long-term benefit of property appreciation but underwriting the cost of ownership – and with a shortage of quality and affordable housing it was an additional burden on residents.

Aside from the cost issues, it also seemed like an ongoing web of red tape and paperwork to file for TPT licenses and submit payments to the local cities.  And that is the short version of an arduous and painful story that any landlord or property manager would be happy to tell you.

So today, it is good news all around.  Say Goodbye to Arizona Rental Tax!

For more details, visit All About Arizona News.