8.15.2

VEHICLE USE TAX (DEPARTMENT OF REVENUE (DOR) AND CITY)

Effective Date: June 18, 2026

Review Due: June 18, 2028

Summary of Changes

No changes needed per the two year review.

Purpose

To provide guidelines for the assessment of a vehicle use tax, state tax, more commonly known as Department of Revenue (DOR) Tax and city tax; including, standards for determining eligibility for a vehicle use tax exemption.

Authority

Two Year Review, A.R.S. §§ 28-2001, 28-2056, 42-5010, 42-5155, 42-5156, 42-5157, 42-5159, 42-5161 and 42-5167.

Policy

1. Any person who uses, stores, or consumes any tangible personal property upon which tax has not been collected by a retailer shall pay use tax. For the purpose of this policy, the only type of tangible personal property that will be addressed is a vehicle.

2. Pursuant to A.R.S. §§ 28-2001, 28-2056 and 42-5156, the Division is required to collect state tax DOR, and city tax, upon the initial application for an Arizona title and/or registration.

3. Upon application, the following vehicles are subject to vehicle use tax (state and city):

1. A vehicle purchased by an Arizona resident from an out-of-state or out-of-country dealer or manufacturer.

• The term “Resident” includes individuals, commercial entities, state, county and city agencies, and political subdivisions.

2. A vehicle used by a nonresident who is conducting business in Arizona.
3. A vehicle (purchased by a dealer) that is to be titled and registered in the name of the dealership.

Note: State DOR tax must be paid prior to titling and registering a vehicle when Vehicle Use Tax (VUT) is applicable.

4. Vehicle use tax (state and city) will not be collected by the Division on a lease buy-out.

State DOR Tax Rates

5. Pursuant to A.R.S. §§ 42-5010 and 42-5155, the state DOR tax rate is equal to 5.6% of the total vehicle price, including additions that make the vehicle more valuable. The vehicle price may be obtained from any one of the following documents:

1. A copy of the purchase invoice.
2. Copies of the lending contract.
3. A letter from the dealership or manufacturer.

6. When determining the vehicle price, the ADOR allows the Division to subtract any allowable deductions. When subtracted on a purchase invoice, the following deductions are allowed:

1. Total trade-in allowance.
2. Manufacturer’s cash rebate when the purchaser assigns the rights in the rebate to the dealer.

7. When a vehicle is purchased by an Arizona resident from a dealer or manufacturer located in a foreign country (example: Germany, Canada, Mexico, etc.), the amount of state DOR tax due is determined as follows:

1. The vehicle price is equal to the average retail value for the vehicle.
2. The state DOR tax rate is equal to 5.6% of the average retail value.
3. Full payment of the state DOR tax is collected, regardless of any taxes that may have been paid.
4. A $200 tax credit shall be applied to the state DOR tax calculations.

City Tax Rate

8. The Division shall collect city tax on behalf of ADOR. City tax will only be collected when a dollar amount displays in the City VUT field.

Exemptions and Reductions (DOR and City Tax)

9. A vehicle (or vehicle combination) is exempt from the vehicle use tax when:

1. The vehicle is acquired by means of a casual sale (example: sale between two individual private parties).
2. A licensed leasing company owns the vehicle and the leasing company is applying for title in its own name.
3. The vehicle is acquired by an Arizona licensed dealer for resale purposes and registration is not requested.
4. The vehicle is purchased by a:

1. An enrolled member of a Native American tribe.

• A completed and signed Vehicle License Tax Tribal Exemption, form #48-7701, is required when the vehicle is purchased by an enrolled member of a Native American tribe.

2. Qualifying hospital, health care organization, or nonprofit charitable organization.

• Qualifying hospitals, health care organizations and nonprofit charitable organizations must present a copy of the ADOR exemption letter at the time of application for the exemption.

3. Federal government agency

10. A completed and signed ADOR Transaction Privilege Tax Exemption Certificate Form 5000 is required when the applicant is claiming nonresident status or an exemption that is not identified above.

11. A vehicle is exempt or partially exempt when the owner has paid a tax in a different state and the tax amount is equal to, or greater than, 5.6%. When the use tax paid to another state is less than 5.6% (of the vehicle price), the difference is due.

1. Any one of the following documents may be used to establish the amount of tax paid to the other state:

1. A copy of a lien contract.
2. A letter from the dealership (bill of sale).
3. A copy of the purchase invoice.

12. If the tax rate paid to the other state was greater than or equal to the state of Arizona’s 5.6% rate then no vehicle use tax is due, however no refund is applicable.

13. The burden of proving that the applicable tax has been paid rests upon the owner and until the proof is established to the satisfaction of the Division and ADOR.

14. The only agency authorized to refund an overpayment of vehicle use tax collected from an Arizona title or registration transaction is ADOR.

15. A customer who wishes to appeal the vehicle use tax assessment must file a written protest within 45 days after the notice of a proposed assessment. Customers seeking an appeal shall be directed to ADOR for tax assessment appeal information.