Politics & Finances

A Complete Guide to Arizona's Grocery Tax Bill

Julie Farless
A Complete Guide to Arizona's Grocery Tax Bill

Arizona House Bill 2061 (HB 2061) seeks to amend the state’s existing grocery tax regulations. As an Arizona resident, you probably have a number of questions about how the potential passage of this bill could impact you and your family.

In this guide, you’ll find answers to frequently asked questions about the grocery tax bill, and come away with a better understanding of your household budget could be affected.

Let’s get started.

What is Arizona HB 2061?

In order to fully grasp how the new restrictions laid out in HB 2061 could impact you, it’s important to know what the bill really says. Officially, it seeks to amend one section – Section 42-6015 – of the Arizona Revised Statutes regarding city taxes.

The language in the bill prevents cities, towns, and all other taxing jurisdictions in Arizona from levying "transaction privilege, sales, use, franchise or other similar tax or fee, however denominated," on the sale of any food items that are intended for human consumption at home.

In layman’s terms, the bill would eliminate all food and grocery taxes across the state.

The bill passed 6-4 in a State House Committee, with all Republicans on the panel voting yes.

What are Arizona’s current grocery tax laws?

The Grand Canyon State currently has no grocery tax at the state level, according to an official fiscal note shared on the Arizona State Legislature’s website.

However, the state does allow for the taxation of food items, provided that the levy is “applied uniformly with respect to all food, and an additional tax or fee differential is not assessed or applied with respect to any specific food item.”

Essentially, this gives municipalities free reign to pass tax laws on groceries.

Do any Arizona cities currently have grocery taxes?

There are multiple cities throughout Arizona that assess grocery taxes. The three largest municipalities – Phoenix, Tucson, and Mesa – do not have food taxes, but other mid-size communities like Chandler, Gilbert, Scottsdale, Peoria, Tempe, and Paradise Valley, all do.

Many of the tax levies are relatively small. In Scottsdale, for example, groceries are taxed at a rate of 1.65%.

The funds collected from food taxes go toward a variety of purposes, including infrastructure maintenance, funding public facilities like libraries and schools, and other city projects.

How are politicians reacting to the bill?

State Representative Leo Biasiucci (R-Maricopa County) introduced the bill, Tweeting that "Arizonans shouldn't have to pay taxes to put food on the table for their families."

As previously noted, HB 2061 has received Republican support in the legislature.

Opponents, though, say that the measure would do irreparable harm to some small-town budgets. On the official Twitter page for Arizona House Democrats, lawmakers expressed that grocery taxes comprise a significant portion of the overall annual budget in towns like Taylor, Springerville, and Benson.

The most recent action on the bill at the time of publication was the second House read on January 18, 2021.

What are your thoughts on the grocery tax bill?

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Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

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