AZ Sales Tax 101 Shipping States

Is Shipping in Arizona Taxable?

by Mark Faggiano

Shipping Taxable in Arizona

Last updated July 14, 2017

You’ve just made a sale in Arizona, a state where you have sales tax nexus. While you’re happy about the money, you’ve now got a conundrum on your hands. Namely, should you charge sales on shipping and handling costs or not?

It doesn’t help that every single state is different, so it’s not like you can use other state as an example. To help you out, let’s take a look at Arizona’s rules on the taxability of shipping.

Sales Tax on Shipping in Arizona? It Depends…

Luckily, Arizona knew people would come calling with questions and outlined the various scenarios involved with shipping and sales tax. Keep in mind in Arizona they call what we think of as “sales tax” the “Transaction Privilege Tax (TPT),” or basically a tax for the “privilege” of doing business with the state.

From the Arizona Department of Revenue website:

When included in the retail sales price, a shipping charge from the manufacturer or wholesaler to the retailer is considered a cost of doing business and is included in the taxable proceeds from the sale. If goods are shipped directly from the manufacturer or wholesaler to the purchaser, a charge for freight may be excluded from taxable gross proceeds if separately stated. Actual freight charged by the retailer to deliver goods to the purchaser is not taxable under the retail classification if separately stated on the invoice.

Basically, if the cost of shipping & handling is included in the retail sales price, it’s considered taxable. If it’s stated separately and shipped directly to the purchaser, then you may exclude it from sales tax.

Here’s a screencap from the Arizona DOR website: 

Arizona shipping delivery charges TPT
Summary of Sales Tax on Shipping in Arizona

Many states are confusing on shipping or even simply don’t take into account, making you play guessing games. Arizona, though, is nice and straightforward. If the shipping costs are separately stated on the invoice, you shouldn’t have to collect sales tax on shipping from your customers. If the costs are included in the price of the item, you are required to collect tax.

Have questions or comments about taxable shipping in Arizona? Leave a comment below and start the discussion!

  • nairb2

    We purchase our shipping boxes from a company called Uline. They have nexus in Arizona, and the merchandise ships from California via a 3rd party shipper. The invoice states a merchandise cost and a freight/handling cost in two separate boxes. But they are charging sales tax on the sum of the merchandise plus the freight/handling cost. Shouldn’t we only be taxed on the merchandise cost?

    • Hi there,

      Every company has to charge sales tax based on their own liability issues, and every company is different. We can’t say what their liability issues might be, so it’s best to contact the company with your questions. I hope that helps!

  • Pingback: Is Shipping Taxable?()

Start your 30 day free trial of TaxJar. No credit card required.

Cached Query Manual Filing?filterByFormula=OR({State} = "") needs refreshing in 155