Privilege Tax

The Town of Carefree imposes a 3% privilege tax on gross receipts derived from the rental of commercial property, and on qualified residential properties. Gross rent receipts includes rent, late fees, sewer-trash charges and non-refundable deposits.

Residential rental property located within the Town is subject to this tax if the property owner has three (3) or more residential rental units within the state of Arizona. If a residential rental property owner also has any commercial rental property in the state, then all of the residential rental property within Carefree is subject to the 3% use tax. If a property manager handles the residential rental/s for a property owner, the rent receipts from that property are subject to the 3% tax, even if the owner owns less than three (3) units in the state.

Carefree assesses a 3% use tax for out-of-state, non-taxed purchases over $1,000. This use tax removes the competitive advantage out-of-state internet-based businesses have over current and future local businesses by applying a uniform local tax rate. Internet purchases under $1,000, as well as items such as prescription drugs, are exempt from the use tax.

Carefree privilege taxes are collected by the Arizona Department of Revenue on behalf of the Town. Please call (602) 255-3381 with questions, or visit their web site, Arizona Department of Revenue.

Arizona Department of Revenue

The Arizona Department of Revenue has released the Arizona Transaction Privilege Tax Notice (PDF) to address various questions and provide examples involving changes to the prime contracting classification for Arizona transaction privilege tax due to AZ House Bill 2389, effective January 1, 2015.

The department has issued new TPT/Sales tax renewal requirements as of January 1, 2017. For more information click here.