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Businesses that rent out items that would be tax-exempt if sold under a specific existing exemption (which the bill's title describes as textbook rental) may now deduct that rental income from Arizona's transaction privilege tax, which works like a sales tax on businesses.
Official title: TPT; exemption; textbook rental
- September 12, 2026
- Applies to tax periods starting on or after the first day of the month after the general effective date: The new rental tax deduction
What changes
BeforeRental income could be deducted from the personal property rental tax only if the item would have been exempt from tax if bought, under a listed set of existing sales tax exemptions. Paragraph 17 of the retail exemption list was not on that list.
NowParagraph 17 of the retail exemption list is added. Income from renting items that would have been exempt under that paragraph if bought is deducted from the tax base. The bill's title calls this textbook rental.
Who it affects
- Businesses that rent out items covered by the added exemption (described in the bill's title as textbooks)
- People who rent those items, such as textbook renters
- Arizona Department of Revenue
What you need to do
Nothing.
What the law doesn't answer
- The text does not spell out what items paragraph 17 of the retail exemption list covers. Only the bill's title mentions textbook rental.
- Whether any savings will be passed on to people who rent the items
- How much tax revenue the change affects
This summary describes the law as enacted. Later laws, court rulings or referendum petitions can change the picture. Check the official text for the current wording.