# Arizona economic nexus threshold

Arizona's economic nexus threshold is $100,000 in sales.

## Included transactions:

- Taxable retail sales of tangible personal property delivered to Arizona customers
- Direct sales under the retail TPT classification

## Excluded transactions:

- Sales facilitated by a licensed marketplace facilitator that collects and remits TPT on the business's behalf
- Non-retail TPT classifications such as rentals, contracting, and restaurant sales

## Affiliate nexus

Arizona aggregates sales across affiliated entities when determining whether the economic nexus threshold is met. An ["affiliated person"](https://www.azleg.gov/ars/42/05043.htm) is defined as any entity with a direct or indirect ownership interest of more than 5% in the other entity. When the combined taxable retail sales of all affiliated entities exceed $100,000, each affiliate must independently obtain its own [TPT license](https://azdor.gov/business/transaction-privilege-tax/retail-sales-subject-tpt/out-state-sellers/economic-threshold), even if no single affiliated entity would qualify on its own. Affiliates may satisfy this obligation through individual returns or on a consolidated return.

## Physical nexus

Physical presence in Arizona [creates substantial nexus across all 16 TPT classifications](https://www.azleg.gov/ars/42/05044.htm) from the first dollar of sales, with no threshold requirement. [Confirmed physical nexus triggers](https://azdor.gov/business/transaction-privilege-tax-tpt/retail-sales-subject-tpt/out-state-sellers/frequently-asked-questions) include maintaining an office or other place of business in Arizona; owning or leasing real or personal property in the state; maintaining inventory in Arizona under the seller's direction and control; delivering goods in company-owned or leased vehicles; employing or engaging agents in Arizona for sales, management, or marketing purposes; and using in-state suppliers to fulfill orders.

Certain activities do not create physical nexus: attending a one-time conference or meeting in Arizona without making sales; a remote employee performing back-office tasks while temporarily present in Arizona for personal reasons; and inventory held in a third-party fulfillment center over which the seller exercises no direction or control, though the Arizona DOR has not issued a definitive ruling on this last point.

[Establishing TPT nexus in Arizona](https://azdor.gov/business/transaction-privilege-tax/retail-sales-subject-tpt/out-state-sellers/economic-threshold) automatically confers nexus with all Arizona municipalities, as state nexus equals municipal nexus under the state's unified TPT structure.

## Trailing nexus

Arizona has two distinct trailing nexus rules codified in [A.A.C. R15-5-2002(E)](https://azdor.gov/sites/default/files/2023-03/NoticeofExemptRulemakingTitle15Ch5.pdf). For physical nexus, the obligation to report and remit TPT continues through the last day of the month in which physical presence ends. For economic nexus, a business that met the $100,000 threshold in the prior calendar year but does not meet it in the current year must continue remitting for the entire current calendar year.

### Economic Nexus Threshold:

$100,000 in taxable retail sales only

### Effective Date:

October 1, 2019

### Evaluation Period:

Current or prior calendar year. Collection begins on the first day of the month at least 30 days after crossing.

### Previous Threshold Rules:

Step-down threshold: $200,000 (Oct–Dec 2019), $150,000 (2020), $100,000 (2021 onward). Measurement basis changed from gross proceeds to taxable sales only as of January 1, 2024.

[Get a free nexus study](/content/demo/index.html)

## Simplify your tax workflow today.