Arizona Ended the Residential Rental Tax: What Phoenix Landlords Should Change Now

If you own a rental in the Phoenix area, the Arizona residential rental tax rules that shaped your lease and your bookkeeping have changed, and one line on your rent statement is probably now out of date. For years, most Arizona cities charged a transaction privilege tax on residential rent, and landlords passed that rental tax along to tenants as a separate line item. That residential rental tax is now gone for long-term rentals across Phoenix, Tempe, Mesa, Chandler, Gilbert, and Scottsdale, and a lot of owners are still collecting it out of habit.

Here is what changed, why it happened, what it does and does not affect, and the handful of things Phoenix landlords should fix this month so your leases, your accounting, and your tenants are on the same page. If you already work with a Phoenix property management company, this is the kind of update they should handle for you, but it helps to understand it either way.

What changed with the Arizona residential rental tax

As of January 1, 2025, Arizona cities can no longer charge transaction privilege tax, known as TPT, on residential rent for long-term leases of 30 days or more. This came out of state legislation passed in 2023 and is written into A.R.S. § 42-6004(H), which limits what cities can tax. Before this, Arizona was one of the few states where cities taxed residential rent at all.

The way it used to work is worth understanding, because it explains what you need to unwind. Cities set their own residential rental tax rate under the model city tax code, the standardized framework the Arizona Department of Revenue administers on behalf of municipalities. A property owner would collect that tax on top of rent, then remit it, usually through the Department of Revenue's combined TPT filing. Landlords held a TPT license for exactly this purpose.

That municipal rental tax on long-term residential rent is now off the table statewide. It does not matter which city your property sits in. The tax simply does not apply to long-term residential leases anymore, and the collection and remittance that went with it stop too.

What the change does not touch

This is where owners get tripped up, because ending the rental tax did not end every obligation that involved the word "rental." Three things stay exactly as they were.

• Short-term and vacation rentals. Stays under 30 days are treated as transient lodging, not long-term residential rent, and they are taxed differently. If you run a short-term rental, nothing here changes your filing.
• Commercial leases. This is about residential rent only. Commercial and retail leases are a separate category.
• Residential rental registration. Under A.R.S. § 33-1902, owners of residential rental property still have to register that property with the county assessor, and keep the information current. That is a completely separate requirement from the tax, and it did not go away. If you are in Maricopa County, your registration obligation stands.

It is also worth saying clearly that this change has nothing to do with your property tax. Residential rental property is still assessed as Class 4 property by the county assessor, and your annual property tax bill is unaffected. The rental TPT and property tax were always two different things.

Which Phoenix-area cities charged it

Almost every city in the metro levied a residential rental tax, each at its own rate. That included Phoenix, Tempe, Mesa, Chandler, Gilbert, Scottsdale, Glendale, and Peoria, among others. Because the rates varied, the exact number on your old rent statement depended on where the property sits. The important point now is that the city line, whatever the rate was, no longer applies to long-term residential rent in any of them.

Why owners keep collecting a tax that no longer exists

The most common reason is simple. The rental tax was baked into old lease templates, into property management software, and into the monthly rent statement, and nobody went back to remove it. If your lease still lists a city tax on top of rent, your tenant is very likely paying something they no longer owe, and your books may still be tracking a tax the city can no longer levy.

This is not a small housekeeping detail. Charging a tax that no longer applies can create disputes with tenants, complicate your bookkeeping, and cause friction at renewal time. It is the kind of thing that looks minor until a tenant notices it and asks why they are still paying a tax the news said was repealed.

What Phoenix landlords should change now

Here is the practical checklist. Most of it takes an afternoon.

1. Take the tax line off your leases and renewals. Any new lease, renewal, or addendum you send should not include a city residential rental tax line for a long-term rental. If you use a standard template, fix the template so the error does not repeat.
2. Update your rent statements and ledger. Remove the tax line from what you bill each month and from how you record it. In your accounting, retire the tax as a line item so your rent roll reflects rent only.
3. Fix your software. If you use a platform like AppFolio, Buildium, or similar, correct the fee or tax setup so it stops auto-generating the charge. Software will keep billing it forever if you do not turn it off.
4. Close out your TPT filing correctly. If you held a TPT license only for residential rental, confirm with the Department of Revenue or your tax professional how to handle your account going forward so you are not filing for a tax you no longer collect.
5. Tell your current tenants. A short, clear note that the city rental tax no longer applies to their lease builds trust and heads off confusion when they see the change on their next statement.
6. Review your base rent separately. Removing the tax does not lower your rent, because the tax was always a separate charge. But it is a natural moment to check whether your base rent still matches the market, especially with the amount of new apartment supply that has come online across the Phoenix metro.
7. Confirm your registration is current. Since you are already in your records, verify your county assessor rental registration is up to date. Two birds, one afternoon.

How this fits your bigger financial picture

It helps to be clear-eyed about what this does and does not do for your bottom line, because it surprises some owners.

The rental tax was money that flowed through you to the city, not income you kept. Removing it does not raise your net operating income, and it does not lower your real operating expenses. What it does is make your rent cleaner. A prospective tenant comparing listings sees a single, simple rent number instead of rent plus a tax line, and a cleaner number is easier to say yes to. In a market with rising supply, anything that helps a listing convert faster is worth having.

If you want the change that actually moves your return, look at the three things that always matter: your base rent relative to the market, your vacancy time between tenants, and your operating costs. Those are the levers, and one of them, your operating costs, includes management. If you are weighing that cost, our guide to what it costs to manage a 10, 20, or 50-unit property breaks the numbers down. This tax change is a cleanup task, not a profit lever, and treating it that way keeps your expectations honest.

Related rules worth keeping current while you are at it

Since you are already updating leases, it is a good time to make sure the rest of your paperwork reflects current law. The Arizona Residential Landlord and Tenant Act governs most of what goes into a residential lease, from notice periods to security deposit handling, and it is easy for an old template to drift out of step. Fair housing rules apply to every listing and every screening decision. A lease that is current on all of this protects you far more than one line about a tax ever did.

If you want a refresher on what a clean, current lease should include, our guide to a solid lease agreement walks through it in plain language.

If you own in more than one Phoenix-area city

Portfolio owners used to juggle a different rental tax rate for every city, so a fourplex in Tempe and a duplex in Mesa carried different tax lines on their statements. That complexity is gone for long-term residential rent. Every long-term residential unit you own across Phoenix, Tempe, Mesa, Chandler, Gilbert, Scottsdale, Glendale, or Peoria now follows the same rule, which is no city rental tax at all.

If you manage several properties yourself, this is a chance to simplify. Standardize your lease template and your rent statement once, then apply the same clean version across the whole portfolio, instead of maintaining a separate one for each city. If a property manager handles your portfolio, ask them to confirm they have updated every property and every active lease, not just the newest additions. It is easy for one older building to get missed.

When to get help

You can handle the lease and statement cleanup yourself. Where it pays to bring in a professional is anything involving tax already collected before the change, your specific remittance history, or how to close out a TPT account. Those are questions for a tax professional or the Arizona Department of Revenue, not something to guess at.

If you would rather not track any of this yourself, this is exactly the kind of thing a property manager keeps current for you, along with leasing, screening, rent collection, inspections, and maintenance. You can see how that works on our owner services page, and if you own in the metro, our Phoenix property management page covers the areas we serve.

This guide was reviewed and updated in September 2026. It is general information, not tax or legal advice. Confirm how the change applies to your property with the Arizona Department of Revenue or a qualified tax professional.

Frequently asked questions

Do Arizona landlords still charge residential rental tax in 2026?
No. As of January 1, 2025, Arizona cities can no longer charge TPT on residential rent for long-term leases of 30 days or more, under A.R.S. § 42-6004(H). If a long-term lease still has that line, it should come off.

Does the change apply to short-term rentals?
No. It covers long-term residential rentals of 30 days or more. Short-term stays under 30 days are treated as transient lodging and taxed differently, and commercial leases are not affected.

Which Phoenix-area cities charged residential rental tax before?
Most did, including Phoenix, Tempe, Mesa, Chandler, Gilbert, Scottsdale, Glendale, and Peoria, each at its own rate under the model city tax code. None of them can levy it on long-term residential rent anymore.

Do I still have to register my rental with the county?
Yes. Registration under A.R.S. § 33-1902 with the county assessor is a separate requirement that did not change. Keep it current.

Do I need to refund tenants for tax collected before the change?
Going forward you simply stop collecting it. Anything collected before the change depends on your lease and city, so have a tax professional or the Arizona Department of Revenue review your specific case.

Should I lower the rent now that the tax is gone?
Not automatically. The tax was a separate line, so removing it does not change your base rent. It is a good moment to check your rent against the current market, which a rental analysis can do for you.