2025 Tax Cuts Promise Major Savings for Arizona Renters

By Matthew Holloway |

Arizona is poised for a significant shift in rental taxation as the Transaction Privilege Tax (TPT) on rental payments will be eliminated this January. This move has sparked celebrations among renters and local Republicans, while city officials express concern over potential budget shortfalls.

Seventy-five municipalities across Arizona previously imposed TPT rates between 1.5% and 4% on rental agreements. For renters, this translates to savings of approximately $20 to $50 per month, depending on their rental cost.

Arizona Senate President Warren Petersen announced the tax repeal’s importance as part of a broader plan to alleviate inflation for residents. He stated, “Renters are about to get relief from the rental tax repeal passed by the Republican-led legislature,” acknowledging that securing the governor’s approval delayed the tax elimination to January 1, 2025.

Jake Beeson, a property manager, shared insights on the impact of the tax removal: “For some tenants, it’s going to mean quite a bit. A 2% discount on a $900 rent means $18, which can cover a month of discounted school lunches for kids.” The rental rates across the valley range from 2% in Mesa to 4% in some cities.

However, not everyone welcomes the tax relief. Lee Grafstrom, a tax policy expert, warned of the implications for city budgets, predicting a loss of $230 million in annual revenue. He emphasized the need for local governments to balance budgets without cutting essential services. Grafstrom noted, “This is a minor piece of a solution to a much larger problem regarding housing affordability.”

As local leaders grapple with this impending financial challenge, the League of Arizona Cities and Towns highlighted that without state assistance, municipalities might face tough decisions, including cuts to services or possible tax hikes. The repercussions of this tax repeal will be felt in more ways than one as communities adjust to the changes.

The relief in taxes could empower renters to invest their savings in local goods and services, potentially stimulating the economy amid ongoing inflationary pressures.

Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.