Arizona exempts lessors of motor vehicles from the transaction privilege tax on their income if they are subject to the motor carrier fee.

In order to qualify for the exemption, the motor carrier fee must be paid by the lessor, lessee, or authorized third party on the specific vehicle(s) being leased. This exemption only applies to vehicles that weight over 12,000 pounds and that are self-propelled. Lessors are also exempt on their purchases of vehicles, repairs, and parts when motor carrier fees have been paid on the vehicles being repaired. (Transaction Privilege Tax Ruling TPR 03-2, December 4, 2003.)