Arizona Exempts Used Ag Equipment from Sales Tax

Arizona Gov. Doug Ducey has signed an $18 billion, 2023 fiscal year budget that expands the sales tax exemption for used, rental and lease agricultural equipment, and off-highway vehicles (OHVs) for farming and ranching, effective Oct. 1, 2022.

Far West Equipment Dealers Association (FWEDA) joined the Arizona Farm and Ranch Group (AFRG) to convince lawmakers to enhance competition and ease financial burdens on farmers and ranchers in the state with passage of House Bill 2400 amending Arizona law to exempt Transaction Privilege Tax (TPT) collections on used agricultural machinery, and short-term rental and lease equipment of fewer than two years. It also provides a narrow exception for OHVs.

Among adjacent states, Arizona was the only one that did not exempt used, rental and lease agricultural equipment and parts from collecting sales tax, which put Arizona businesses at a significant competitive disadvantage, Woelfel told the Senate Finance Committee and the House Ways & Means Committee.

The only way to regulate sales tax collections on used equipment is when end users purchase through a dealer, which can forces dealers to cut margins or lose sales to compete with private sales of used equipment.