By Nick Kanavati | Pinal Post
Shoppers, diners, and residents paying utility and cell phone bills will start seeing the town’s first transaction privilege tax, commonly called a local sales tax, beginning October 1. On Wednesday, July 1, the Town Council set the San Tan Valley sales tax at 2.25% for most purchases. Construction will pay 5%, while hotels and the additional tax on transient lodging were each set at 4.25%. The votes came the same night the town began operating independently from Pinal County.
Groceries are the lone exception to the October start. The grocery tax is scheduled to begin January 1, 2027, giving the town time to respond if a statewide ballot measure this November blocks it.
San Tan Valley Sales Tax Rates At A Glance
Until now, the town has charged no transaction privilege tax of its own, Town Manager Brent Billingsley told the council. Transaction privilege tax is Arizona’s version of a sales tax, and the new 2.25% town rate will be added to existing state and county taxes. It covers retail sales, restaurants and bars, utilities, communications, property rentals and more than a dozen business classifications in all.
A handful of categories fall outside that general rate. Construction is taxed at 5% — a rate that applies to prime contractors, speculative builders and owner-builders alike. Short-term lodging carries two town levies: a 4.25% hotel tax plus a separate 4.25% tax on transient lodging. And a 0.10% severance tax applies to metal mining. The town currently has no hotels, Vice Mayor Tyler Hudgins noted, but Councilmember Gia Jenkins said the lodging tax would apply to short-term rentals such as Airbnbs.
“We are not talking property tax,” Mayor Daren Schnepf added, noting that a property tax would require voter approval.
Why Builders Will Pay 5%
Normally, a growing town helps pay for new roads and parks by charging developers a one-time impact fee on each home they build. San Tan Valley’s draft study set that draft fee near $6,200 for a single-family home. But a new state law bars the town from collecting the fee on housing already approved by Pinal County, and because it is the town’s first impact fee, staff say the delay applies to those lots for a full 24 months.
“Due to a change in state law, we’re unable to collect the development impact fees for the next 30 months,” Billingsley told the council. Impact fees aren’t charged when land is platted. They come due later, when a builder pulls a permit to actually construct each home. The new law protects lots that Pinal County had already approved through a final plat or site plan before the town’s fee ordinance takes effect: on those lots, the town cannot charge its new fee for 24 months, even as permits are pulled and homes go up. In San Tan Valley, that covers an estimated 6,000 to 7,000 single-family lots. With the ordinance expected around December, the practical delay runs about 30 months from the July 1 meeting.
