Arizona HB 2786 deducts bookstore rentals of required college textbooks from the TPT personal property rental classification

What changed in detail

Arizona House Bill 2786 of the 57th Legislature, Second Regular Session (2026), titled “TPT; exemption; textbook rental”, adds a deduction to the transaction privilege tax (TPT) personal property rental classification. The gross proceeds of sales or gross income that any bookstore derives from renting textbooks required by any state university or community college are deducted from the tax base of that classification.

Sales of the same required textbooks were already exempt under the TPT retail classification (A.R.S. § 42-5061). The new deduction gives rentals equivalent treatment under the personal property rental classification (A.R.S. § 42-5071).

The bill was signed on 22 June 2026 and the deduction applies from 1 October 2026. The Senate fact sheet states that the deduction applies to taxable periods beginning on the first day of the month following the general effective date, and that the act becomes effective on the general effective date.

What it means

The deduction is narrow: it covers rentals by bookstores of textbooks a state university or community college requires, not general book rentals or rentals by other kinds of lessor. Bookstores that run rental programmes should report the qualifying rental income as a deduction on their TPT return from the first period the deduction applies to.