Vivian Marlowe
Alcohol taxes in Arizona are a complex affair, with various taxes and regulations applying to the sale of beer, wine, and liquor. Licensed alcohol retailers in the state, including wineries, microbreweries, and craft distillers, are subject to transaction privilege tax (TPT) when selling these beverages. Additionally, excise taxes are levied on alcohol at both the state and federal levels, with wine vendors, for example, paying an excise tax of $0.84 per gallon on top of federal excise taxes. Direct-to-consumer (DTC) shipments of alcohol may also be subject to markup taxes, where the retail value is multiplied by a percentage rate, and traditional gallonage-based excise taxes.
| Characteristics | Values |
|---|---|
| Excise taxes | $0.84 per gallon |
| Excise taxes applied on | Wine, beer, and liquor |
| Excise taxes paid by | Merchant |
| Passed on to the consumer? | Yes, in the form of raised alcohol prices |
| Wholesale shipments | Required to be reported on Arizona tax returns |
| Consumer limit | 12 cases (108 liters) per person per year |
| Product restrictions | Only wines produced by the permittee may be sold and shipped to consumers |
| Product requirements | Wine must be packaged in containers labeled to indicate alcoholic content |
| Product requirements | Signature of a person 21 years of age or older is required for delivery |
| Luxury tax on liquor | Applies to sale, production, and purchase |
| Luxury tax filers | Wholesalers, craft distilleries, farm wineries, direct shippers, and microbreweries |
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What You'll Learn
Excise taxes on wine, beer, and liquor
Excise taxes are applied on a per-unit basis, usually per gallon for liquids, and are collected from the merchant who sells the alcohol, although they are typically passed on to the consumer in the form of raised alcohol prices. In Arizona, excise taxes are levied on wine, beer, and liquor (which includes most hard alcohols).
Wine vendors in Arizona are responsible for paying a state excise tax of $0.84 per gallon, in addition to federal excise taxes, for all wine sold. This rate doubles to $4 per gallon if the wine contains more than 24% alcohol. Excise taxes on wine in Arizona are among the highest in the country.
Beer is taxed at a rate of $0.16 per gallon in Arizona, which is relatively low compared to other states.
Liquor in Arizona is subject to a luxury tax, which is levied on the sale, production, and purchase of spirituous, vinous, and/or malt liquors. Licensed liquor retailers, including farm wineries, microbreweries, and craft distillers, are liable for a transaction privilege tax (TPT) when selling these types of liquor within the state. The excise tax rate for liquor is $3 per gallon.
It is worth noting that direct-to-consumer (DTC) shipments of alcohol in Arizona may be subject to additional taxes, such as markup" taxes, where the retail value of the alcohol is multiplied by a percentage rate. These taxes are often passed on to the consumer.
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Direct-to-consumer (DTC) shipments
In Arizona, licensed alcohol shippers are required to register for sales tax in most states, independent of economic or physical nexus. This includes direct-to-consumer (DTC) shipments, which are subject to additional alcohol taxes on top of the sales tax requirements.
Several states, including Arizona, have "markup" taxes, where the retail value of the alcohol is multiplied by a percentage rate. These markup taxes are usually passed on to the consumer in the form of raised alcohol prices. Excise taxes are also typically due on DTC shipments and are usually factored into the item's price. Excise taxes are applied on a per-unit basis, generally per gallon for liquids, and are collected from the merchant who sells the alcohol. In Arizona, wine vendors are responsible for paying a state excise tax of $0.84 per gallon, plus Federal excise taxes, for all wine sold.
Wholesalers, farm wineries, manufacturers, direct shipment licensees, microbreweries, and craft distillers are required to file returns indicating the amount of liquor sold in gallons using Arizona Form 815 or 835. Form 815 is for wholesalers selling within Arizona and wholesalers of malt liquors purchasing for resale within the state, while Form 835 is for craft distilleries, farm wineries, direct shipment licensees, and microbreweries making sales at retail or to retail licensees. Out-of-state producers are not subject to Arizona luxury liquor tax and are not required to file a return.
Direct sales to customers in Arizona fall under the retail classification of transaction privilege tax (TPT). Licensed liquor retailers in Arizona, including farm wineries, microbreweries, and craft distillers, are liable for TPT when selling spirituous, vinous, or malt liquor within the state. Retailers can apply for a TPT license online at AZTaxes.gov.
It is important to note that tax rates, rules, and regulations change frequently, and this information may not always be up to date. For the most accurate and current information, it is recommended to consult official government sources or seek professional tax advice.
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Wholesale shipments
In the state of Arizona, wholesalers are subject to luxury tax on liquor for the sale, production, and purchase of spirituous, vinous, and/or malt liquors. Wholesalers are required to file returns indicating the amount of liquor sold in gallons, using Arizona Form 815 or 835. Form 815 is used by wholesalers selling within Arizona, whereas Form 835 is used by craft distilleries, farm wineries, direct shipment licensees, and microbreweries making sales at retail or to retail licensees.
Wholesalers of malt liquors purchasing for resale within Arizona must also file returns using Form 815. Licensed liquor wholesalers in Arizona, including farm wineries, microbreweries, and craft distillers, are liable for transaction privilege tax (TPT) when selling spirituous, vinous, or malt liquor within the state. Direct sales to customers in Arizona are classified as retail sales, and licensed liquor retailers are responsible for paying TPT on these transactions.
Wholesalers are required to report wholesale shipments on Arizona tax returns. This includes direct-to-consumer (DTC) shipments, which may be subject to additional alcohol taxes on top of sales tax requirements. These taxes can be in the form of "markup" taxes, where the retail value of the alcohol is multiplied by a percentage rate, or traditional "gallonage"-based excise taxes, which are typically factored into the price of the item. Excise taxes on alcohol are applied per unit, generally per gallon, and are collected from the merchant who sells the alcohol. However, these taxes are usually passed on to the consumer in the form of raised alcohol prices.
For example, wine vendors in Arizona are responsible for paying a state excise tax of $0.84 per gallon, in addition to federal excise taxes, for all wine sold. It is important to note that tax rates, rules, and regulations can change frequently, and businesses should refer to the most up-to-date information provided by the Arizona Department of Revenue.
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Luxury liquor tax
Arizona has a luxury liquor tax that applies to the sale, production, and purchase of spirituous, vinous, and/or malt liquors in the state. Licensed liquor retailers in Arizona, including farm wineries, microbreweries, and craft distillers, are liable for transaction privilege tax (TPT) when selling spirituous, vinous, or malt liquor within the state. Retailers can apply for a TPT license online at AZTaxes.gov.
Wholesalers, farm wineries, manufacturers, direct shipment licensees, microbreweries, and craft distillers are required to file returns indicating the amount of liquor sold in gallons using Arizona Form 815 or 835. Form 815 is for wholesalers selling within Arizona and wholesalers of malt liquors purchasing for resale within the state. Form 835 is for craft distilleries, farm wineries, direct shipment licensees, and microbreweries making sales at retail or to retail licensees.
Out-of-state producers are not subject to Arizona's luxury liquor tax and are therefore not required to file a return. Liquor distillers, out-of-state producers, and manufacturers are no longer required to send in invoices with their liquor luxury tax returns, but they must maintain a copy of the sale invoice in their records.
In addition to (or instead of) traditional sales taxes, alcoholic beverages like wine, beer, and liquor are subject to excise taxes on both the Arizona and Federal levels. Excise taxes on alcohol are applied per unit, generally per gallon for liquids, and are collected from the merchant who sells the alcohol. However, they are usually passed on to the consumer in the form of raised alcohol prices. The tax rate for beer is 16 cents per gallon, and the rate for liquor is $3 per gallon. For wine, the rate is 84 cents per gallon, unless it contains more than 24% alcohol per gallon, in which case the rate is $4 per gallon. Excise taxes are typically paid by the wholesaler, but some or all may be included in the retail price.
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Transaction privilege tax (TPT)
TPT filings, payments, and renewals are currently only available at AZTaxes.gov. Businesses needing updated information on transaction privilege tax can access the Arizona Department of Revenue's (ADOR) monthly newsletter, TPT Tax Rate Table, and Model City Tax Code (MCTC) changes by clicking on the appropriate month and year. For older information, one can visit the archives.
Licensed liquor retailers in Arizona, including farm wineries, microbreweries, and craft distillers located in the United States, are liable for TPT when selling spirituous, vinous, or malt liquor within the state. Retailers can apply for a TPT license online at AZTaxes.gov.
Effective September 14, 2024, persons under the age of 19 may operate a business without a TPT license if the business does not generate more than $10,000 in gross income in a calendar year. If a person under the age of 19 is operating a business with a TPT license (with an adult included on the license) and the business does not generate more than $10,000 in gross sales per year, then the license may be canceled with effect from October 1, 2024. Starting January 1, 2025, residential rental property owners will no longer collect and remit any city TPT on the income derived from long-term lodging stays of 30 days or more. However, hotel, motel, or other transient lodging businesses that book stays for fewer than 30 days must still collect and remit TPT under the transient lodging or hotel classification.
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Frequently asked questions
Alcoholic beverages like wine, beer, and liquor are subject to excise taxes on both the Arizona state and federal levels. Wine vendors are responsible for paying a state excise tax of $0.84 per gallon, plus federal excise taxes.
The luxury tax on liquor in Arizona applies to the sale, production, and purchase of spirituous, vinous, and/or malt liquors. Wholesalers, craft distilleries, farm wineries, direct shipment licensees, and microbreweries are required to file returns and pay taxes using specific forms.
Yes, in addition to sales tax, alcohol taxes also apply to DTC shipments. Arizona Form 815 should be used by wholesalers, while Form 835 is for craft distilleries, farm wineries, direct shippers, and microbreweries.
Yes, wine shipped directly to consumers in Arizona must be packaged in containers with clear labels indicating alcoholic content. A signature from an individual aged 21 or older is also required for delivery.
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