Deduction code
In short
The number that identifies which deduction is being claimed on Schedule A. A deduction without a code is not a deduction.
In full
A deduction code identifies which statutory or Model City Tax Code deduction an amount is being claimed under. It is entered on Schedule A of the return together with the region code, the business code and the amount, and it is what makes a deduction claimable at all — a figure subtracted without a code has no basis on the face of the return.
Codes are not universally available. Each one lists the state and city business codes it applies to, and some apply only to certain cities. Deduction 690 for design phase and professional services is available at state level and not to cities; deduction 734 for the fair market value of land is available only in the cities that adopted Local Option #N, which ADOR's listing enumerates by name.
One pattern is worth learning because it explains something the guidance asserts without explaining. The prime contracting codes in the 600s are cost-basis mirrors of the retail codes in the 500s — 622 is the cost of the 522 deduction in gross income, 691 the cost of 591, and so on. That is the machinery behind retail deductions carrying into the retail equivalent computation: the contractor claims, at cost, what a retailer would have deducted at sale.
Deduction 500 carries a condition its short name hides. It is not simply an MRRA deduction — it reaches a maintenance, repair, replacement or alteration contract with the property owner, which is the same limitation A.R.S. § 42-5075(P) places on the exclusion itself.
| Code | Listing description | State B.C. | City B.C. |
|---|---|---|---|
| 500 | PC: MAINTAIN-PAIR-REPLACE-ALTER CONTRACT with PROPERTY OWNER | 15 | 15 - 16 - 37 |
| 502 | PC: 35% DEDUCTION Allowed | 15 | 15 - 16 - 37 |
| 550 | PC: SUBCONTRACTING INCOME | 15 | 15 |
| 551 | TAX COLLECTED or FACTORED included in Gross Receipts | 15 among others | 15 - 16 among others |
| 557 | PC: Cost of ARCHITECTURAL or ENGINEERING Service | 15 | 15 - 16 - 37 |
| 560 | PC: DEVELOPMENT FEES paid | 15 | 15 - 16 - 37 |
| 622 | PC: COST of 522 DED in Gross Income | 15 - 315 | 15 - 16 - 37 - 315 |
| 690 | PC: DESIGN PHASE or PROFESSIONAL SERVICES | 15 | N/A |
| 734 | SPEC BLDR: EXEMPT FAIR MKT VALUE OF LAND — city specific, seventeen cities named | N/A | 16 |
| 801 | SPEC BLDR: EXEMPT — IN PLACE LEASE — city specific | N/A | 16 |
| 802 | SPEC BLDR: EXEMPT STATE/COUNTY TX PAID BY CONTRACTOR — city specific | N/A | 16 |
ADOR TPT Deduction Codes listing, updated 2026-08-01; A.R.S. § 42-5075(B), (P); Model City Tax Code § 416(b)(2)