In Arizona, digital products such as e-books, music downloads, and streaming services are generally not subject to the Transaction Privilege Tax (TPT) as tangible personal property. However, if digital goods are sold with any tangible media or physical components, they may incur TPT. Additionally, some local jurisdictions might have specific regulations that tax digital products, depending on their delivery method and usage.

For example, if an e-book is provided on a physical medium like a USB drive, it could be taxable. Similarly, bundled services or products that include both digital and physical elements may trigger tax obligations. Online sellers must consult local tax authorities to determine the taxability of their digital products in each municipality where their customers reside. Ensuring accurate classification and adherence to local rules helps businesses maintain compliance and avoid inadvertent tax liabilities.