Tempe Prop 424: What the Half-Cent Sales Tax Would Mean for Tempe Homeowners

by Daniel Barash

Tempe Prop 424: What the Half-Cent Sales Tax Would Mean for Tempe Homeowners

By Daniel Barash, REAL Broker AZ, LLC | Updated October 26, 2026

Short answer: Tempe Proposition 424 would raise the City of Tempe sales tax from 1.8% to 2.3% starting January 1, 2027, if voters approve it on November 3, 2026. Groceries for home use stay at 1.8%. Long-term residential rent can't be taxed by any Arizona city under state law, so your rent or mortgage payment itself isn't what changes. What changes is the tax on most other things you buy in Tempe.

I'm not telling you how to vote. I'm a real estate agent, and Tempe homeowners and buyers keep asking me what this measure actually does to their monthly costs. So here are the numbers, with sources, and both sides in their own words.

What is Tempe Prop 424?

Tempe Prop 424 is a City of Tempe ballot measure that would add a new 0.5% transaction privilege (sales) tax and use tax, excluding food for home consumption. The Tempe City Council sent it to voters with Resolution No. R2026.48 on May 14, 2026. It is the only City of Tempe measure on the November 3, 2026 ballot.

The city's own wording: "If approved by voters, Tempe's sales tax rate would increase from 1.8% to 2.3% beginning January 1, 2027." (City of Tempe Prop 424 FAQ, accessed October 23, 2026.) If the measure fails, the city rate stays at 1.8%.

The council vote to put all three uses into a single question was 6-1, according to Arizona Agenda (May 1, 2026).

The Tempe Municipal Building at 31 E. 5th St. in downtown Tempe. Photo: Visitor7, CC BY-SA 3.0, via Wikimedia Commons.

How much would Prop 424 add to what Tempe residents pay?

Prop 424 adds 50 cents of tax for every $100 of taxable purchases in Tempe. The City of Tempe puts it as "an estimated $0.05 in tax for every $10 spent." The combined rate on most purchases in Tempe would go from 8.1% to 8.6%. The city has not published a yearly cost per household, and I won't guess one.

Rate piece	Today	If Prop 424 passes (from Jan. 1, 2027)
State of Arizona + Maricopa County	6.3%	6.3%
City of Tempe	1.8%	2.3%
Combined rate on most purchases	8.1%	8.6%
City rate on food for home consumption	1.8%	1.8% (unchanged)

Sources: Arizona Department of Revenue rate table effective October 1, 2026; City of Tempe Prop 424 FAQ. The 8.6% figure is simple addition of the official pieces and assumes no state or county change. Details as of October 23, 2026, subject to change.

Quick math on a real purchase: a $1,200 refrigerator bought in Tempe would carry about $6 more in tax. A $40 dinner out would carry about 20 cents more.

Where would the Prop 424 money go?

The City of Tempe splits Prop 424's half cent three ways: 0.3% for public safety, 0.1% for transit and 0.1% for early childhood care and preschool. Supporters and the city's deputy city manager estimate it would raise about $50 million a year.

Share	Use (per the City of Tempe)
0.3%	Police, fire, paramedics, community responders, park rangers, emergency preparedness, street and park lighting, and related vehicles and equipment
0.1%	Transit operations, extending the Tempe Streetcar east of Mill Avenue to Tempe Marketplace and into Mesa, bike and pedestrian projects, bus shelters
0.1%	Early childhood care and preschool for ages birth to 5, including more Tempe PRE classrooms and tuition help

The roughly $50 million figure comes from Deputy City Manager Lisette Camacho, as reported by Arizona Agenda. Part of the reason for the measure: Arizona cities lost the ability to tax residential rent at the start of 2025, which news outlets estimate cost Tempe roughly $20 million to $25 million a year.

Does Prop 424 change rent or property taxes in Tempe?

No. Prop 424 is a sales tax, not a property tax, so it doesn't touch your Maricopa County property tax bill. It also can't apply to long-term residential rent. The Arizona Department of Revenue says "Arizona cities are not be able to impose a tax on residential rentals from and after December 31, 2024."

That quote, typo and all, is from the Arizona Department of Revenue residential rental guidelines. Short-term rentals of under 30 days and commercial rent are still taxable in Tempe today, and so are utilities and contracting, per the City of Tempe taxable activities page.

One thing I could not confirm: whether the extra 0.5% will apply to every one of those categories, like contracting on a remodel or your utility bill. The city's description reads like a general increase on everything except groceries, but the city code changes come after the election. If you're planning a big remodel in Tempe in 2027, ask your contractor how they'll handle it.

What are supporters and opponents of Prop 424 saying?

Supporters of Tempe Prop 424 say it funds services Tempe would otherwise cut, and that visitors help pay for it. Opponents say it raises costs on local businesses and residents and that the city hasn't shown enough data. Here are both sides, quoted from ABC15 (October 21, 2026).

Tom Duensing, chair of the Tempe Forward PAC, which supports the measure: "It's a way to get direct services to the residents of Tempe, but it's paid by much more than just the residents of Tempe."

Gabe Hagen, owner of Brick Road Coffee, who opposes it: "If they go out and eat at the restaurant next door, they're paying more, so it is regressive."

Linda Arters, a former Tempe community relations manager who questions the campaign's 911 claims: "We're giving you our money to spend. You have an obligation to show us the numbers."

On how long the tax would last: the City of Tempe FAQ does not list an end date. The opposition campaign, the Tempe Coalition for Tax Fairness, calls it "permanent" on its website. Check the city's mailed publicity pamphlet if that matters to your vote.

What does Prop 424 mean if you're buying or selling a home in Tempe?

For most Tempe buyers and sellers, Prop 424 won't move home prices or the monthly mortgage payment. A resale home purchase isn't a retail sale. The impact shows up in everyday spending, and possibly in services the city funds, like streetcar expansion, which buyers near the line watch closely.

If you're comparing Tempe with Chandler or Mesa on cost of living, the city sales tax is one small line in that math. Property taxes, HOA dues and insurance usually matter a lot more. I break those down in my October 2026 mortgage rate post for Tempe and Chandler payments.

Key Prop 424 dates

The last recommended day to mail a ballot in Maricopa County is Tuesday, October 27, 2026. Early in-person voting ends Friday, October 30. On Election Day, November 3, polls are open 6 a.m. to 7 p.m. Sources: Maricopa County Elections calendar and Arizona Clean Elections.

Frequently asked questions

What is the Tempe sales tax rate now?

The City of Tempe rate is 1.8%. With the state and Maricopa County portions, the combined rate on most purchases in Tempe is 8.1% as of October 2026.

When would the Prop 424 increase start?

January 1, 2027, if Tempe voters approve Prop 424 on November 3, 2026.

Are groceries taxed more under Prop 424?

No. The City of Tempe says food for home consumption stays at the current 1.8% city rate.

Will Prop 424 raise my rent in Tempe?

Not directly. Arizona law bars cities from taxing long-term residential rent as of January 1, 2025. Short-term rentals under 30 days are a different category and are still taxed.

Does Prop 424 raise property taxes?

No. Prop 424 is a sales and use tax. Your property tax bill comes from the Maricopa County Treasurer and isn't part of this measure.

Thinking about buying or selling in Tempe?

If you're trying to figure out what owning in Tempe really costs, I'm happy to run the numbers with you on a specific home or neighborhood. Call or text me at 480.906.3831. You can also read more on my Tempe real estate page and my South Tempe neighborhood guide.

This post explains a ballot measure. It is not a voting recommendation and not legal, tax or financial advice. Details as of October 23, 2026, subject to change.

Sources

About the author: Daniel Barash has spent nearly 10 years in Phoenix-area real estate and works with buyers and sellers across Tempe, Chandler and the East Valley with REAL Broker AZ, LLC.

Daniel Barash | REAL Broker AZ, LLC | 480.906.3831