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Friday, Apr. 4, 2025

Did Phoenix approve the city’s largest-ever sales tax increase in 2025?

Carmela Guaglianone, Arizona Center for Investigative Reporting
no

While the Phoenix City Council approved a 0.5% increase in Transaction Privilege Tax and Use Tax rates — commonly known as sales tax — on certain business categories in March 2025, Phoenix passed a larger (1%) hike in 1976, according to a city spokesperson. 

The latest increase, to 2.8% for affected transactions, will take effect July 1, 2025. It aims to make up for recent losses in city general fund revenue that are expected to result in a budget deficit of $39 million next fiscal year. Arizona law requires Phoenix to pass a balanced budget, so the council needed to increase revenue or decrease expenditures to address the projected shortfall. 

City officials linked the deficit to two recent state laws. One eliminated residential rental taxes, while the other replaced the progressive state income tax with a flat rate.

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Fact briefs are bite-sized, well-sourced explanations that offer clear "yes" or "no" answers to questions, confusions, and unsupported claims circulating online. They rely on publicly available data and documents, often from the original source. Fact briefs are written and published by Gigafact contributor publications.

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The Arizona Center for Investigative Reporting is the state’s only independent, nonpartisan and collaborative nonprofit newsroom dedicated to statewide, data-driven investigative reporting. AZCIR's mission is to hold powerful people and institutions accountable by exposing injustice and systemic inequities through investigative journalism.

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