San Tan Valley, located approximately 7 miles southeast of Queen Creek, officially launched its first local sales tax on October 1, coinciding with the town’s transition to independent status from Pinal County. The Town Council approved the new tax structure on July 1, setting the general rate at 2.25% for retail sales, dining, utilities, and communications. This levy is added to existing state and county taxes.
The town has designated specific rates for certain industries. Construction activities are subject to a 5% tax, which applies to prime contractors, speculative builders, and owner-builders. Short-term accommodations face two separate levies: a 4.25% hotel tax and a 4.25% tax on transient lodging. Councilmember Gia Jenkins clarified that the transient lodging tax extends to short-term rentals like Airbnb properties, even though the town currently has no hotels. A 0.10% severance tax is also in place for metal mining.
Grocery items are exempt from the October start date. The grocery tax will begin on January 1, 2027. Town Manager Brent Billingsley stated this delay allows the town to adjust if a statewide ballot measure in November prevents the implementation of a grocery tax.
The higher construction tax rate addresses a revenue gap caused by state law changes. Normally, towns collect one-time impact fees from developers to fund infrastructure. However, a new state law prohibits San Tan Valley from collecting these fees on housing lots already approved by Pinal County. This restriction applies to an estimated 6,000 to 7,000 single-family lots, creating a delay of approximately 30 months in fee collection.
Billingsley explained that Arizona law links construction taxes to impact fees. When a town raises its construction tax above the general rate, the excess amount serves as a credit against impact fees, preventing double taxation. By setting the construction rate at 5%, the town effectively zeroes out the impact fees it would otherwise collect. This structure allows the town to generate revenue from construction during the period when it cannot collect traditional development fees.
