SB1184

THE CONTEXT: TPT on the business of residential rentals is imposed at the city-level and TPT rates vary by municipality. The Model City Tax Code (MCTC) is a uniform sales and use tax act that has been adopted by most Arizona cities and towns as the basis for imposing tax.

WHAT THE BILL DID: Prohibits, beginning January 1, 2024, a city, town or other taxing jurisdiction from levying a tax or fee on the business of renting or leasing real property for residential purposes (business of residential rentals). Directs the State Treasurer to proportionately distribute a total of $269,020,800 over 18 months from the state General Fund portion of transaction privilege tax (TPT) revenues to cities and towns that levied a residential rental TPT during FY 2022.

WHY IT MATTERED: The practical reason for this bill was to make the state tax, regulatory, or economic rule for municipal tax exemption more predictable. It would prohibits, beginning January 1, 2024, a city, town or other taxing jurisdiction from levying a tax or fee on the business of residential rentals, and would also direct the State Treasurer, from January 1, 2024, until June 30, 2025, to proportionately distribute $14,945,600 each month from the state General Fund portion of TPT revenues to cities and towns that levied a residential rental TPT during FY 2022 based on the city s or town s average monthly TPT collections during FY, rather than leave the current rule unchanged.