Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2400
TPT; exemption; agricultural equipment
Purpose
Requires the gross proceeds of sales or gross income derived from sales of agricultural
machinery and equipment, rather than only new agricultural machinery and equipment, including
off-highway vehicles, to be deducted from the tax base for the retail classification of transaction
privilege tax (TPT).
Background
The gross proceeds of sales or gross income derived from sales of certain tangible personal
property must be deducted from the tax base for the retail classification of TPT, including new
machinery and equipment consisting of agricultural aircraft, tractors, tractor-drawn and
self-powered implements and machinery and equipment necessary for extracting milk and for
cooling milk and livestock. New agricultural machinery and equipment is exempt from use tax.
New machinery and equipment is machinery and equipment that have never been sold at retail
except pursuant to leases or rentals that do not total two years or more (A.R.S. ยงยง 42-5061 and
42-5071).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 2400 would reduce
the state General Fund portion of TPT revenue distributions by $583,000 annually (JLBC fiscal
note).
Provisions
1. Requires the gross proceeds of sales or gross income derived from sales of agricultural
machinery and equipment, rather than only new agricultural machinery and equipment, to be
deducted from the tax base for the retail classification of TPT.
2. Exempts, from use tax, the gross proceeds of sales or gross income derived from sales of
agricultural machinery and equipment, rather than only new agricultural machinery and
equipment.
3. Includes off-highway vehicles in agricultural machinery and equipment for the purposes of the
TPT deduction and use tax exemption.
4. Defines off-highway vehicles as off-highway vehicles that meet the definition used for the
purposes of traffic and vehicle regulation and that are not equipped with a modified exhaust
system to increase horsepower or speed or an engine that is more than 1,000 cubic centimeters
or that have a maximum speed of 50 miles per hour or less.
5. Removes the definition of new machinery and equipment. FACT SHEET
H.B. 2400
Page 2
6. Applies the modified exemption and deduction to taxable periods beginning on or after the
first day of the month following the general effective date.
7. Contains a technical conditional enactment.
8. Makes technical changes.
9. Becomes effective on the general effective date or later, subject to the provisions of the
conditional enactment.
House Action
WM 2/2/22 DP 6-4-0-0
3
rd
Read 2/23/22 38-21-1
Prepared by Senate Research
March 14, 2022
MG/AN/slp