PHOENIX — If you make a retail purchase or eat out in Phoenix, it’s going to cost more beginning July 1.
The Phoenix City Council voted Tuesday to increase the city’s sales tax rate from 2.3% to 2.8%.
The increase puts Phoenix at the higher end compared to other Valley cities. Chandler charges just 1.5% in sales tax while Buckeye’s sales tax is 3%.
Here’s what the increase means:
On purchases where city sales tax applies, the increase will be an extra 50 cents on a $100 purchase. You will pay an extra $5 on a $1,000 purchase.
City sales tax does not apply to everything you buy. For example, there is no Phoenix city sales tax when you buy groceries, put gas in your car or get your hair cut.
Without an increase, city leaders told the council they would have to make cuts in city programs and services. Phoenix is the fifth most populous city in the United States with 1.6 million people and growing.
Do you have a concern in your community or a news tip? We want to hear from you!
Connect with us: share@abc15.com
“The city is faced with making some tough choices. Unlike the federal government, we have to balance our budget. We cannot deficit spend,” Phoenix City Manager Jeff Barton told the council in February.
There are two main reasons the city is facing a revenue shortfall, according to city budget experts. The state’s switch to a flat state income tax has resulted in less money being shared with cities. Also, legislation that eliminated the residential rental tax also has decreased city revenues, city leaders said.
If the sales tax rate was not increased, the council was told Phoenix would likely face a $39 million deficit in fiscal 2026. Over a three-year period, that baseline deficit could grow to $125 million.
Phoenix City Councilman Carlos Galindo-Elvira said he supports the sales-tax increase.
“It doesn’t enrich our coffers,” he said. “What it does is maintains a level of service that we have promised to our residents.”
The sales-tax increase will also provide $25 million in new funding to go toward reducing fire department response times.
The vote was 8-1 in favor of the sales tax increase with Councilman Jim Waring voting against the measure.
