City of Tucson
Transient Rental (Hotel/Motel) Tax Changes
The City of Tucson has adopted code changes that affect transient rental businesses and
businesses who provide services through hotels. Effective January 1, 2007, these changes will
make Tucson’s code similar to the State of Arizona’s code and other Arizona cities’ tax codes.
Tucson’s interpretation of the code (where state and city codes are similar) will be following the
Arizona Transaction Privilege Tax Ruling TPR 06-1 and the accompanying matrix.
Changes and General Information
The definition of transient is changing. Currently, Tucson considers all customers staying for 30
days or less to be transient, and therefore, the income received taxable. On a customer’s 31st
consecutive day, the rent income became exempt from tax. This will change. Income received
from customers renting on a daily or weekly basis, or any other basis for less than 30
consecutive calendar days, will be taxable. A customer renting in weekly blocks will always
remain a taxable customer even if they stay for 30 days or more. Rental income is exempt only if
the customer informs the hotel, in writing, that they are staying for at least 30 consecutive days.
If the customer leaves before the 30th day, the income will become taxable unless the customer is
committed to pay for the 30 day minimum.
The matrix and the new interpretation of the code will change how some hotel related charges are
classified for tax purposes. The general rule of thumb is that if the activity is only available to
hotel guests, the income is subject to the transient rental tax. If the activity is also available to
non-hotel guests, then the income may be subject to tax under a different activity, such as retail or
rental, or it may be exempt as a service. Tucson currently considers charges for rollaway beds,
refrigerators or room safes to be taxable under the rental activities for tangible and real property.
The new interpretation will tax the income under the transient rent