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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
TPT; exemption; textbook rental
Purpose
Exempts the gross income derived from renting required college textbooks from a bookstore from the transaction privilege tax (TPT) personal property rental classification.
Background
TPT is a gross receipts tax levied for the privilege of conducting business in Arizona and is imposed under 16 business classifications. The retail classification of TPT is comprised of the business of selling tangible personal property at retail. The tax base for the retail classification is the gross proceeds of sales or gross income derived from the business. Textbooks sold by any bookstore that are required by any state university or community college are exempt from TPT under the retail classification (A.R.S. § 42-5061).
The personal property rental classification of TPT is comprised of the business of leasing or renting tangible personal property for a consideration. The tax base for the personal property rental classification is the gross proceeds of sales or gross income derived from the business. Statute prescribes deductions from the tax base (A.R.S. § 42-5071).
If deducting the gross income derived from renting textbooks from a bookstore that are required by a state university or community college from the tax base results in a change to TPT collections, there may be a fiscal impact to the state General Fund.
Provisions
1. Requires the gross proceeds of sales or gross income derived from renting textbooks by any bookstore that are required by any state university or community college to be deducted from the tax base of the personal property rental classification of TPT.
2. Applies the TPT textbook rental deduction to taxable periods beginning on the first day of the month following the general effective date.
3. Becomes effective on the general effective date.
House Action
WM 1/28/26 DP 8-0-0-1
3rd Read 2/19/26 56-0-4-0
Prepared by Senate Research
February 26, 2026
MG/SJ/ci