Motor carrier taxes - Arizona

Property/ad valorem taxes

Arizona imposes a Vehicle License Tax (VLT), which is a type of ad valorem tax, on vehicles registered to operate within Arizona. The VLT is paid at the time of registration each year. It is based on an assessed value of 60 percent of the manufacturer's base retail price reduced by 16.25 percent for each year since the vehicle was first registered in Arizona. From there, the rate is calculated based on the assessed value. The VLT is $2.80 per $100 of assessed value for new vehicles and $2.89 per $100 for used vehicles.

For trailers and semitrailers over 10,000 pounds gross vehicle weight, the VLT is a one-time fee of $555 for trailers which have not previously been registered, $355 for trailers less than six years old which have been previously registered in another state, and $100 for trailers six or more years old which have been previously registered in another state.

Sales & use taxes

Arizona imposes a Transaction Privilege Tax (TPT), which is a type of sales tax, on vendors for the privilege of doing business within the state. The TPT rates vary depending on the type of business activity, the city, and the county. Those who must pay the tax include persons in the business of transporting for-hire persons, freight, or property by motor vehicle, railroads, or aircraft from one point to another point within Arizona. Exemptions to this tax are available within A.R.S. Title 42, Chapter 5, Article 2.

An annual light motor fee is imposed on each motor vehicle that has a gross weight of 12,000 pounds or less and is used to transport for-hire persons, freight, or property. The fee is payable at the time the light motor vehicle is registered. Vehicles subject to the annual light motor vehicle fee are not subject to TPT.

Arizona also imposes a use tax on vehicles purchased or registered within the state. If a carrier has paid the vehicles sales tax in another state at a rate equal to or greater than the use tax rate within Arizona, then the carrier has no further tax to pay. However, if the sales tax paid out-of-state is less than the use tax rate within Arizona, then the motor carrier must pay the difference to Arizona. The use tax applies when leasing or renting real and personal property within the state.

Some of the exemptions to the use tax include:

• If motor fuel is subject to the Arizona fuel excise tax, then payment of sales tax is exempt.
• Repair labor is not taxable providing it is listed separately on the invoice.

The use tax is equal to the transaction privilege tax rate.