If you own a short-term rental in Sedona, Arizona’s Transaction Privilege Tax (TPT) applies to every dollar of gross rental income you collect. The combined effective rate for most Sedona STRs runs 13.325% for properties in Yavapai County (West Sedona, Village of Oak Creek, Big Park) and 13.900% for properties in Coconino County (Uptown, Chapel area, and Oak Creek Canyon). That stack includes the state portion, the county excise, the City of Sedona transient lodging tax, and the City of Sedona additional bed tax. Get it wrong and the Arizona Department of Revenue (ADOR) and the City of Sedona Finance department will both find you. Eventually with interest, penalties, and back-filing requirements that can swamp a year of net rental income.

This guide is what I wish every new Sedona STR owner had read before their first booking. I’m Will Hamburg, a third-generation Sedona Realtor and Associate Broker. I’ve personally owned dozens of properties here including STRs. The TPT side of running a Sedona STR is one of the most-asked-about and most-misunderstood parts of the business.

What is Arizona TPT and why STR operators must register

Arizona Transaction Privilege Tax is technically NOT a sales tax, even though it functions like one. It’s a tax on the privilege of doing business in Arizona. The business pays it, not the customer (though virtually every operator passes it through to the customer as a line item).

For short-term rentals specifically, TPT applies because the IRS and Arizona Department of Revenue classify rentals under 30 days as “transient lodging.” Transient lodging is subject to TPT at the state, county, and city levels.

The layers that stack on a Sedona STR booking:

For most Sedona properties (those in Yavapai County):

  1. Arizona State + Yavapai County combined: 6.325% (filed to the Arizona Department of Revenue, which handles both the state portion and the county excise on your behalf)
  2. City of Sedona Hotels (business code 044): 3.500%
  3. City of Sedona Additional Bed Tax (business code 144): 3.500%

Combined effective rate for most Sedona STRs: 13.325%

For Sedona properties in Coconino County (Uptown, Chapel area, and Oak Creek Canyon), the state + county combined rate is 6.900% instead of 6.325%, bringing the total combined STR tax to 13.900%.

Critical point most operators get wrong: Airbnb and VRBO now collect and remit Arizona TPT for all bookings made through their platforms. This does NOT remove your filing obligation. You must still submit a TPT return for each filing period, even if it shows $0 due because the platforms remitted everything. Failure to file the return itself is what triggers most audits — even when the actual tax was paid by the platform.

Rates can and do change. Always verify with the Arizona Department of Revenue and the City of Sedona Finance department before relying on these for actual filings.

You must register for TPT before your first booking. The penalty for collecting TPT without a license, OR for failing to collect TPT on rentals, is the same: back taxes plus interest plus a civil penalty.

How to get a Sedona TPT license

Sedona STR owners need TWO licenses, sometimes confused as one:

  1. Arizona TPT License (state-issued through AZTaxes.gov)
  2. City of Sedona Short-Term Rental Permit (city-issued, separate process, covered in detail in my Sedona STR licensing guide)

This article focuses on the TPT side. The STR permit side lives in the other article.

Step 1: Register for an Arizona TPT license

Go to AZTaxes.gov and create an Arizona Department of Revenue account. The system walks you through the application. You’ll need your federal EIN (or SSN if filing under personal name), business name and physical Sedona address, business activity code (025 for transient lodging), estimated monthly gross income from rentals, and your bank info for electronic filing.

The application typically processes in 7 to 15 business days. You’ll receive a TPT license number and instructions for setting up your filing schedule.

Step 2: Register with the City of Sedona for local taxes

When you register for state TPT, you also automatically register for the city portion IF Sedona is selected as your business location. Verify after registration that both Sedona and Yavapai County (or Coconino County, depending on your property’s location) tax codes appear on your account.

Step 3: Display your TPT license at the property

Arizona law requires that your TPT license be displayed at the rental property in a location visible to guests. Most STR operators frame it next to the welcome book or post it inside a kitchen cabinet. ADOR auditors do check for this during compliance reviews.

Sedona STR TPT filing codes (the part most people get wrong)

Filing your TPT is done monthly, quarterly, or annually depending on your gross income. Most active Sedona STR operators file monthly because the income thresholds for less-frequent filing are low.

Critical: the activity code matters.

For short-term rentals (under 30 days), the correct state-level activity code is Class 025: Transient lodging. NOT Class 213 (long-term residential rental, for 30+ day rentals). NOT Class 044 (use tax).

If you accidentally file under the wrong class, your filing is technically incomplete and you may owe additional tax. I’ve seen audit cases where mis-classification triggered three years of back-filing requirements.

Within the AZTaxes system, the codes you’ll select per filing:

Some accounting systems pre-populate these but ALWAYS verify before submitting. The Yavapai/Coconino county line runs right through Sedona — if you’re in Uptown, the Chapel area, or anywhere north of town, double-check which county you’re actually in. It affects your filing rate by 0.575 percentage points.

Combined Sedona STR tax rates (as of 2026)

Here’s what most Sedona STRs collect on each booking. Sedona straddles two counties, so the exact combined rate depends on whether your property sits in Yavapai or Coconino County.

For Sedona properties in Yavapai County (West Sedona, Village of Oak Creek, Big Park):

Tax Component Rate
Arizona State + Yavapai County combined (filed at ADOR) 6.325%
City of Sedona Hotels (City Code 044) 3.500%
City of Sedona Additional Bed Tax (City Code 144) 3.500%
Total combined rate 13.325%

For Sedona properties in Coconino County (Uptown, Chapel area, Oak Creek Canyon):

Tax Component Rate
Arizona State + Coconino County combined (filed at ADOR) 6.900%
City of Sedona Hotels (City Code 044) 3.500%
City of Sedona Additional Bed Tax (City Code 144) 3.500%
Total combined rate 13.900%

Important: Rates change. The City of Sedona transient lodging tax was permanently increased from 3.000% to 3.500% effective March 1, 2018 (Ordinance 2021-09 made the increase permanent). The additional bed tax has been at 3.500% since January 1, 2014. Always verify with the City of Sedona Finance department (928-204-7185) or AZTaxes.gov before relying on these numbers for actual filings.

A note on the 2025 Arizona residential rental tax ban: Arizona’s prohibition on cities taxing residential rentals (effective January 1, 2025) does NOT apply to short-term rentals under 30 days. Transient lodging remains fully taxable at all three jurisdictional levels.

Filing schedules and deadlines

Monthly filers (most STRs): Due the 20th of each month for the prior month’s rental income. Late filing penalty is 4.5% per month or partial month, capped at 25% total.

Quarterly filers: Due the 20th day of the month following the end of the filing period.

Annual filers: Due the 20th of the month following the end of the filing period.

Most active Sedona STRs are required to file monthly. Electronic filing through AZTaxes.gov is the fastest path.

Common mistakes Sedona STR operators make

1. Not registering before the first booking. Some operators wait until they “see if the rental works out.” Bookings collected without TPT registration trigger back tax plus penalties. Register first, book second.

2. Confusing the STR permit with the TPT license. These are two separate things issued by two separate government agencies. You need both. Read my STR licensing guide for the permit side.

3. Filing under the wrong activity code. Class 025 transient lodging is what STRs use at the state level. Class 213 long-term residential is NOT for STRs. Sedona’s city codes are 044 (Hotels) plus 144 (Hotel/Motel Additional Tax).

4. Assuming “Airbnb collects, so I don’t need to file.” This is the biggest and most common mistake. Yes, Airbnb and VRBO now collect Arizona TPT on bookings through their platforms. No, that does not exempt you from filing. You must still submit a TPT return for each filing period showing the platform-collected amount (and $0 owed if that’s the only income you had). Failure to file the return itself is what most audits get triggered on, even when the tax was actually paid by the platform.

5. Direct bookings: this is where the real audit risk lives. If you accept any booking outside of Airbnb or VRBO (via Stripe, Square, PayPal, Venmo, direct deposit, or check), YOU are responsible for collecting and remitting TPT on those bookings yourself. The most common Sedona STR audit cases I’ve seen involve operators with direct booking income that was never reported. The Arizona Department of Revenue cross-references 1099-K data from payment processors against TPT filings. Income flowing in that doesn’t appear in your TPT returns is the fastest path to audit.

6. Missing the county distinction. Sedona straddles Yavapai and Coconino. The combined rate differs by 0.575 percentage points between the two counties. If your property is in Uptown, the Chapel area, or Oak Creek Canyon, confirm which county it sits in before you file.

7. Failing to file even with zero income. If you have an active TPT license, you must file every period even if no rental income was collected. Zero-income filings are quick but required.

Audit triggers Sedona STR operators should know

The Arizona Department of Revenue and City of Sedona Finance department both audit STR operators on a rotating basis. The #1 trigger I see is unreported direct bookings.

Both Airbnb and VRBO collect and remit Arizona TPT on bookings through their platforms. So bookings through those channels are largely audit-safe (as long as you still file your zero-balance return). But direct bookings via Stripe, Square, PayPal, Venmo, or bank transfer flow through your payment processor’s 1099-K. ADOR matches that 1099-K data against TPT filings. A mismatch between what your 1099-K shows and what you reported on TPT is the fastest way to get audited.

Other triggers I’ve seen include multiple months of zero-income filings on a property that’s listed and bookable, a neighbor complaint that prompts a city investigation, a sudden drop in TPT reporting after years of consistent income (suggests unreported direct bookings), and operating without a TPT license caught via property record cross-reference.

If you’re audited, ADOR typically asks for three years of booking records, payment processor records, and the platform’s annual income summaries. Be prepared to reconcile.

When to hire a CPA versus DIY

Many Sedona STR operators self-file using AZTaxes.gov and a spreadsheet. That works fine for a single-property operator with a clean income/expense picture.

When you should hire a CPA familiar with Arizona STR taxation: you operate 3+ STR properties, you’re pursuing the bonus depreciation strategy or cost segregation, you have direct bookings (not just Airbnb/VRBO), you’re filing for an LLC or trust ownership structure, or you’re combining TPT filings across multiple Arizona properties.

Tax preparer fees for an STR are typically $400 to $1,200 per year depending on complexity.

How a buyer-side broker fits into the TPT picture

You don’t need me to file your TPT. That’s between you, ADOR, and your CPA. But when you’re acquiring a Sedona STR property, the TPT picture matters before you close.

Verify the seller’s TPT compliance. Outstanding TPT liens follow the property. A clean compliance record is part of due diligence.

Confirm the property’s county. Sedona straddles Yavapai and Coconino. The combined rate difference of 0.575 percentage points compounds significantly over a high-occupancy year. I check this for every STR acquisition I broker.

Estimate post-close TPT compliance cost. New owners must register and may have a brief gap between purchase and first compliant filing. Budget for it.

Pro forma the booking income net of TPT. Most listing pro formas show gross income. The real number after TPT is roughly 12 to 14% lower in Sedona. Don’t underwrite based on gross.

Frequently asked questions

If Airbnb and VRBO collect TPT for me, do I still need to file?
Yes. Both Airbnb and VRBO now collect and remit Arizona TPT (state, county, and Sedona city portions) on bookings made through their platforms. This does NOT remove your obligation to file a TPT return for each filing period. You must still submit a return showing the platform-collected amount and $0 owed (or whatever portion was direct booking income). Failure to file the return itself is what triggers most audits, even when the actual tax was paid by the platform.

What if all my bookings come through Airbnb or VRBO?
You still file a TPT return for each filing period. The return will show the platform-collected gross income, the platform-remitted tax, and $0 net due. It takes 5 minutes per period in AZTaxes.gov. Skip it and you’ll get a non-filer notice from ADOR.

What about direct bookings I take outside Airbnb or VRBO?
You are 100% responsible for collecting and remitting TPT on those bookings yourself. Stripe, Square, PayPal, Venmo, direct deposit, checks — any payment channel outside the major platforms. ADOR cross-references 1099-K data from payment processors against your TPT filings. Mismatches trigger audits.

What is my Sedona TPT number for Airbnb?
Your Arizona TPT license number serves as your Sedona TPT number. Airbnb’s host portal asks for the state-issued TPT Account Number. Enter it in the tax settings section of your Airbnb listing.

What’s the current Sedona TPT rate for short-term rentals?
For Sedona properties in Yavapai County (West Sedona, Village of Oak Creek, Big Park), the combined effective rate is 13.325%: 6.325% state + Yavapai County, plus 3.500% City of Sedona Hotels (City Code 044), plus 3.500% City of Sedona Additional Bed Tax (City Code 144). For properties in Coconino County (Uptown, Chapel area, Oak Creek Canyon), the combined rate is 13.900% because the state + Coconino County combined is 6.900%. Always verify current rates with ADOR and the City of Sedona Finance department.

Do I need a separate Sedona business license for my STR?
You need a TPT license (state) AND a Sedona Short-Term Rental Permit (city). These are not the same thing. See my STR licensing guide for the permit side.

What’s the penalty for late TPT filing in Arizona?
4.5% per month or partial month, capped at 25% of the unpaid amount, plus interest. Late penalties compound quickly. Note: the penalty applies to the unpaid amount, but the obligation to FILE the return exists even when the platform paid the tax. Filing late on a zero-balance return won’t accrue dollar penalties but will trigger a non-filer notice.

How long does it take to get an Arizona TPT license?
Typically 7 to 15 business days after submitting the application at AZTaxes.gov.

Does the 2025 Arizona residential rental tax ban affect my STR?
No. The ban applies only to long-term residential rentals (30+ days). Short-term rentals under 30 days remain fully taxable at the state, county, and city levels.

Where do I display my TPT license?
At the rental property, in a location visible to guests. Most operators frame it in the welcome book or post inside a kitchen cabinet.

Ready to acquire a Sedona STR property?

If you’re buying a Sedona short-term rental, the TPT side is just one piece of the picture. Property selection, STR permit eligibility, HOA STR rules, pro forma reality versus listing claims, and the tax stack including bonus depreciation, cost segregation, material participation, and 1031 exchange replacement timing all matter.

I’m Will Hamburg, a third-generation Sedona Realtor and Associate Broker at Realty ONE Group Mountain Desert. I personally own 40+ investment properties including Sedona STRs. When I broker an STR acquisition, I work alongside your CPA and Qualified Intermediary to surface the things that actually matter for the long-term math. If you’re considering a Sedona STR purchase, tell me what you’re looking for. 15-minute conversation, no charge, no obligation.

Important disclosure

This article is general information only and is NOT tax, legal, or accounting advice. Tax rates change. Filing requirements change. Specific compliance for your property depends on your tax district, ownership structure, income profile, and current Arizona Department of Revenue and City of Sedona regulations. Consult a qualified CPA or tax attorney familiar with Arizona Transaction Privilege Tax before relying on any of the above for actual filings. Rates referenced in this guide were sourced from the Arizona Department of Revenue’s Sedona city profile and verified against multiple authoritative sources as of May 2026.

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