Rental of Personal Property

You owe tax on rentals of personal property if:
You are in the business of renting or leasing personal property to others.

Example of taxable rental items include:

  • office equipment
  • construction equipment
  • data processing equipment
  • restaurant equipment
  • appliances
  • video tapes, computer software, etc.
  • cars, trucks, trailers, boats, planes, etc
  • Clothing or costumes

Tax rate and procedures
The tax rate is 1.75% on all rental income. Income is any value received either as funds or bartered services or merchandise.  (Note: The Mesa City Tax rate increased to 1.75% effective 07/01/2006)

Collection of tax
You may choose to charge the tax separately on each sale, or include transaction privilege tax in your price. If you over charge any tax to your customers, you must remit the excess tax to the city.
If you include tax in your price, you can use factoring to "back into" the tax included in your gross sales.


Special Situations

  • Buying items to rent to others
    If you are in the rental business, you do not owe retail transaction privilege tax on items you buy to rent to others. These sales are considered sales for resale and are exempt.

  • Charges added to rent
    Charges for items such as insurance, fuel, mileage, collision damage waiver and maintenance are taxable as part of your rental income. This is true even though the charges may be billed separately from the rental charge.

  • Rent for re-rent
    If you rent items to someone who re-rents the items, you aren't taxable on your rental income. To claim this exemption, the lessor must obtain a properly completed resale certificate from the lessee. Rental of items such as bedding and linens to hotels/motels is not considered rent for re-rent.

  • Renting to contractors or non-profit organizations
    Rentals of equipment to contractors or most nonprofit organizations (except qualifying hospitals, community health centers or health care organizations) are subject to tax.  

  • Lease-purchase
    The rental income from leasing an item that has a purchase option is taxed under personal property rentals until the item is purchased. Income from the eventual sale is taxed as a retail sale.

  • Mobile Equipment
    Equipment that is leased and is not permanently or semi-permanently installed in one location is taxed at the location of the leasing company.

  • Motor Vehicle
    Motor Vehicles leased for a minimum of twenty-four (24) months are taxed at the location of the dealership rather than the location of the lessor.



  • Items rented to a qualifying hospital, a community health center, or a health care organization.
  • The rental of a prosthetic.ce prescribed or recommended by a physician, dentist, or medical professional.
  • Rental of films, tapes, and slides by theaters, television stations, and radio stations. This does not include the rental of videotapes to individuals for their own use.
  • Rental of certain machinery, equipment, and related items used directly in manufacturing, processing, mining, by telephone companies, for electric power production, and transmission pipelines, airlines, railroads, and by the oil and gas industries.
  • Rental to nonresidents of Arizona for use outside the state if you ship or deliver the item out of state.
  • Items semi-permanently or permanently installed within another city or town that levies an equivalent tax on the transaction.
  • Separately billed charges for delivery, installation, repair, and/or maintenance charges.
  • Income from the operation for car washes, and coin-operated washing and drying machines.
  • Rental, leasing, or licensing of aircraft that would qualify as aircraft acquired for use outside the State, if such rental, leasing, or licensing had been a sales and further provided that required documentation is maintained.



Office Locations:
Licensing Office
55 N. Center St.
Mesa, AZ  85201
Phone: 480-644-2316
FAX: 480-644-3999

Tax Audit & Collections
20 E. Main St, Suite 450
Mesa, AZ 85201
Phone: 480-644-3816
FAX: 480-644-2687

Office Hours:

Monday - Thursday
7:00 a.m. to 6:00 p.m.
Closed Fridays

Mailing Address:
Tax & Licensing Office
P.O. Box 1466
Mesa, Arizona 85211-1466


Tax Simplification questions 

More Information:

Tax & Licensing home

Tax Information
Recent Tax Changes

Licensing Information
Liquor License Status
Liquor License FAQ


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