Taxes in Tempe
Tempe combines Arizona's flat and low 2.5% state income tax and a real, if slightly above-Arizona-median, effective property tax rate with a combined sales tax (Transaction Privilege Tax) of 8.1% -- and faces a real, pending November 2026 ballot measure that could raise that sales tax further.
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Learn moreProperty tax: the one exception among these three cities
Tempe's median effective property tax rate is cited at 0.53% (Ownwell) -- notably ABOVE the roughly 0.51% Arizona state median, unlike Mesa (0.44%) and Chandler (0.47%) in this dataset, both of which run below it. Still, Tempe's rate remains roughly half the ~1.02% U.S. national median. Rates vary meaningfully by ZIP: 85284 carries a cited 0.69% median effective rate versus 0.48% in 85288, reflecting different school-district and community-facilities-district levies on the same Maricopa County base.
Arizona's flat 2.5% state income tax -- a real, current, and historically low rate
Arizona has a flat 2.5% individual income tax rate for 2026, per the Tax Foundation and multiple 2026 AZ tax-calculator sources -- described as the lowest flat income-tax rate among US states that levy one, following a transition from a progressive structure completed in 2023 (down from 2.98% in 2023, and 3.5% before that). Arizona DOES levy a state income tax -- unlike Texas, Tennessee, or Florida (no income tax at all) -- but at a genuinely low, flat rate rather than a graduated structure that rises with income.
Tempe's combined sales tax: 8.1%, with a real, pending increase on the November 2026 ballot
The minimum combined 2026 sales tax rate for Tempe is cited at 8.1% -- 5.6% state plus a 1.8% Tempe city rate. A real, current development: Proposition 424, on the November 3, 2026 ballot, would add a new 0.5% transaction privilege (sales) and use tax, excluding food for home consumption purchased at grocery/convenience stores -- if it fails, Tempe's current 1.8% city rate stays in place. This is a genuine, pending policy question rather than a settled rate, and should be checked for its outcome after the election.
Key takeaways
- Tempe's effective property tax rate (0.53%, Ownwell) is the one of these three cities that runs slightly ABOVE the ~0.51% Arizona state median, unlike Mesa (0.44%) and Chandler (0.47%) -- though still roughly half the ~1.02% U.S. national median.
- Arizona levies a real, flat 2.5% individual income tax for 2026 -- the lowest flat rate among states that levy one, but a genuine state income tax, unlike Texas/Tennessee/Florida's zero-income-tax structure.
- Tempe's combined sales tax is 8.1% (5.6% state + 1.8% city) as of 2026, with a November 3, 2026 ballot measure (Proposition 424) that could add a further 0.5% -- a real, pending change to track.
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