Arizona Minimum Wage: State and Local Rates
Arizona’s minimum wage is $15.15 an hour with a $3.00 tip credit. State and city rates, exemptions, youth pay, posters, and what to do when it rises.
Arizona Minimum Wage
The state rate, the Flagstaff and Tucson rates, and what to do when they change
A restaurant owner I worked with had three locations and one wage number in his payroll system. It had been correct when he set it up. By the time he called me it was wrong in two different directions at once: below the state floor for his newest hires, and well below the city floor at the location that happened to sit inside Tucson.
That is the shape of the minimum wage problem in Arizona. The state rate moves every January 1 on an automatic inflation formula that needs no vote from anyone. Two cities sit above it with their own ordinances, their own coverage triggers, and in one case no tip credit at all.
This page covers one thing: what you owe for an hour of work in Arizona, at the state level and in the two cities that raise the floor. You get the current rates, the tip credit, the exemptions, and the posters, then the steps to run each January so a stale payroll number never catches you the way it caught him.
The Current Arizona Rate
The Arizona minimum wage is $15.15 per hour, effective January 1, 2026. It applies to nearly every private employer in the state, with no headcount threshold and no separate figure for part-time or seasonal staff. The Industrial Commission of Arizona publishes and enforces it through its Labor Department.
The Commission announced the rate on September 29, 2025. Its notice of the increase puts the change at $0.45 over the 2025 rate of $14.70 and ties it to the movement in the Consumer Price Index (CPI) between August 2024 and August 2025.
The formula lives in the Arizona Revised Statutes at A.R.S. 23-363, the wage section of the Fair Wages and Healthy Families Act that voters approved as Proposition 206. No legislative action is involved, and the rate cannot fall.
The annual adjustment follows the consumer price index for all urban consumers, U.S. city average, all items. Each January 1 the rate rises by that index’s change from one August to the next, rounded to the nearest five cents.
| Year | Arizona minimum wage | Tipped cash wage | Basis |
|---|---|---|---|
| 2023 | $13.85 | $10.85 | Annual CPI adjustment under A.R.S. 23-363(B) |
| 2024 | $14.35 | $11.35 | Annual CPI adjustment under A.R.S. 23-363(B) |
| 2025 | $14.70 | $11.70 | Annual CPI adjustment under A.R.S. 23-363(B) |
| 2026 | $15.15 | $12.15 | Annual CPI adjustment, up $0.45 on January 1 |
The tipped column is simply the standard rate less the $3.00 maximum tip credit. The minimum wage column shows the pattern worth remembering: the increase is modest, it is never skipped, and it arrives on the same date every year.
When the Rate Changes Next
The next statewide Arizona increase takes effect January 1, 2027, and the amount has not been published. The Commission works from the August consumer price index, which the Bureau of Labor Statistics releases in the middle of September, so the input exists a little before the announcement does.
Recent practice gives a dependable calendar. The 2026 rate was announced on September 29, 2025, and the 2025 rate was likewise published in September, a year earlier. That leaves roughly three months between the published number and the pay period it applies to, which is enough to budget with a real rate instead of a forecast.
Flagstaff is already out in front of the state. The city has published a 2027 minimum wage of $18.95 per hour, effective January 1, 2027, again with no tip credit of any kind, so anyone scheduling hours inside Flagstaff can budget against a real number now.
Tucson runs the same August-over-August consumer price index formula on the same January 1 calendar, and it has not yet posted its 2027 figure. All three of the numbers an Arizona employer cares about are normally settled within the same few weeks of autumn.
Tipped Employees and the Tip Credit
Arizona allows a tip credit of up to $3.00 per hour, so an employee who customarily and regularly receives tips can be paid a cash wage as low as $12.15 while the state rate is $15.15. That $3.00 is a statutory dollar amount, not a proportion, which means it has stayed flat while the rate itself has climbed.
The credit is conditional. Under A.R.S. 23-363(C), you may take it only if you can show that wages plus tips reached at least the full minimum wage for every hour worked in each week. That proof comes from your records of charged tips or from the employee’s declaration for FICA (Social Security and Medicare tax) purposes.
The weekly result is what the test turns on, and the statute lets you establish it by averaging tips across your payroll period or another period you select. The practical consequence is that a slow week is your problem, not the server’s. If tips fall short, you make up the difference in cash for that week.
Where the shift happens changes the arithmetic. A server working inside Flagstaff is owed the full $18.35 in cash, because the city allows no tip credit at all. Tucson caps the credit at $3.00 against its higher local rate, so the tipped cash wage there is $12.45. Everywhere else in the state it is $12.15.
City and County Rates
Two Arizona cities require more than the state rate: Flagstaff and Tucson. A.R.S. 23-364(I) lets any Arizona county, city, or town regulate minimum wages inside its own boundaries, as long as it does not go below the state floor. Everywhere else, Phoenix included, the state rate is the rate.
What triggers a city rate is where the work is physically performed, not where your business is registered or where payroll is processed. A delivery driver, a mobile technician, or anyone covering a shift at a second location can cross into a higher rate midweek.
| Jurisdiction | Rate in effect | Tipped cash wage | Who it covers |
|---|---|---|---|
| Arizona (statewide) | $15.15 | $12.15 | Nearly all private employers, no headcount threshold |
| Flagstaff | $18.35 | $18.35 | Anyone working or expected to work 25 or more hours in a calendar year inside city limits |
| Tucson | $15.45 | $12.45 | Anyone performing at least 5 hours of work per pay cycle inside city boundaries |
| Phoenix, Mesa, Chandler, Scottsdale and the rest | $15.15 | $12.15 | No local ordinance; the state rate applies |
Flagstaff is the outlier on both the rate and the tips. Its rate is $18.35 per hour, and from January 1, 2026 every employee must receive the full rate whether or not they earn tips.
The no-tip-credit rule ended a tipped differential the city had been shrinking year by year under Title 15 of the city code, the title created when voters passed Proposition 414 at the 2016 general election. Flagstaff has also set its next step already: $18.95 per hour from January 1, 2027, on the same terms, so every employee receives the full figure regardless of tips.
Tucson requires $15.45 per hour from January 1, 2026 through December 31, 2026 under the Tucson Minimum Wage Act, which voters approved in November 2021. The city allows a tip credit of no more than $3.00, putting the tipped cash wage at $12.45, and its ordinance does not reach employees of the State of Arizona, the United States, or tribal entities.
Industry Rules and Exemptions
Arizona has no industry-specific minimum wage. There is no fast food rate, no healthcare rate, and no hospitality rate, which keeps the state simpler to run than California. Agriculture is covered by the same statewide figure, because the Arizona Minimum Wage Act draws its exclusions by relationship and business size rather than by sector.
Those exclusions sit in the definitions at A.R.S. 23-362, and the list is short. Everything not on it is covered. In the table, FLSA is the federal Fair Labor Standards Act.
| Situation | Covered by the Arizona rate? | Where the rule comes from |
|---|---|---|
| Fast food, restaurants, retail, hospitality | Yes, at the standard rate | No industry specific rate exists in Arizona |
| Healthcare and home care | Yes, at the standard rate | No industry specific rate exists in Arizona |
| Agriculture, including piece rate work | Yes, at the standard rate | No agricultural carve-out in the Act |
| Employee of a parent or sibling | No | Excluded from the definition of employee, A.R.S. 23-362(A) |
| Casual babysitting in the employer’s home | No | Excluded from the definition of employee, A.R.S. 23-362(A) |
| State of Arizona and federal government staff | No | Excluded from the definition of employer, A.R.S. 23-362(B) |
| Business under $500,000 revenue and exempt from the FLSA minimum wage | No, if both conditions are true | Small business exclusion, A.R.S. 23-362(B) and (C) |
The small business exclusion is the one employers misread. It is not a plain revenue test. The business must have less than $500,000 in gross annual revenue and also be exempt from having to pay a minimum wage under section 206(a) of the Fair Labor Standards Act.
The FLSA condition is the hard one to meet, because federal coverage reaches a great many small operations through the work individual employees do in interstate commerce. Treat the exclusion as a narrow exception that needs checking rather than a default for a small payroll.
If you believe your business qualifies, confirm the federal half of the test before you pay anyone below $15.15, because getting it wrong means back wages plus twice the underpayment.
Youth, Learner, and Training Wages
Arizona has no youth wage, no learner wage, and no training wage. A 16 year old on a first day earns $15.15 per hour, the same as everyone else, and there is no 90-day probationary rate that lets you start someone lower. Neither Flagstaff nor Tucson sets a youth rate either.
The Fair Labor Standards Act does set a federal youth minimum: $4.25 per hour for workers under 20 during their first 90 consecutive calendar days of employment. It simply never applies here. The US Department of Labor’s youth minimum wage fact sheet says that where a state requires a higher minimum wage and makes no exception for workers under 20, the higher state rate applies.
There is also no certificate route to a lower rate, meaning no permit you can apply for to pay less. In a published substantive policy statement on work performed by individuals with disabilities, the Industrial Commission stated that its authority is limited by the Act and that it cannot establish processes or procedures authorizing the payment of subminimum wages to employees.
Posting and Notice Requirements
Arizona does require a minimum wage poster from most employers. Under A.R.S. 23-364(D), employers must post notices of employee rights in the format the Industrial Commission specifies, and the Commission publishes a Fair Wages and Healthy Families Act poster in English and Spanish carrying the current rate. It must be displayed conspicuously in a place accessible to employees, and because it carries the rate, it needs swapping every January.
The Commission’s posting rule exempts the smallest businesses. Arizona Administrative Code R20-5-1208 lets an employer with less than $500,000 in gross annual revenue skip the poster. That test looks at revenue alone, unlike the two-part wage exclusion above. Skipping the poster does not lower the wage: that employer still owes $15.15 unless it also clears the federal half of the wage test.
Two related duties travel with the poster. You must give each employee your business name, address, and telephone number in writing at hire. You must also keep payroll records showing the hours worked each day and the wages paid for four years.
Missing records shift the burden onto you. Failing to keep them raises a rebuttable presumption that you did not pay the required rate, so you would have to prove that you did.
| Jurisdiction | What you post or send | Timing |
|---|---|---|
| Arizona | Industrial Commission Fair Wages and Healthy Families Act poster, English and Spanish | Displayed where employees have access; replaced each January |
| Arizona | Business name, address, and telephone number in writing to each employee | At hire |
| Flagstaff | City minimum wage poster, available in English, Spanish, and Navajo | Displayed at the work location; replaced each January |
| Flagstaff | Written notice of minimum wage rights and responsibilities to every employee | Provided to all covered employees |
| Tucson | City of Tucson minimum wage poster, English and Spanish | Displayed at the work location; the city publishes a new version each year |
The penalties are worth knowing before you decide the poster is a formality. A recordkeeping or posting violation carries a civil penalty of at least $250 for a first offense and at least $1,000 for each subsequent or willful one.
Failing to pay the required wage costs the balance owed, plus interest, plus an additional amount equal to twice the underpayment. Adverse action, such as a firing or demotion, taken within 90 days of an employee asserting a wage right is presumed to be retaliation.
Arizona and the Federal Floor
The federal minimum wage has been $7.25 per hour since 2009 and is less than half of Arizona’s rate, so the federal figure never determines an Arizona paycheck. Where a state rate is higher, the employee gets the state rate.
Federal law still governs everything the state wage statute does not displace: overtime at time and a half past 40 hours, the classification tests that decide who is entitled to a minimum wage at all, and the recordkeeping rules underneath both. Arizona’s own overtime statute covers only state and local government employees, so for a private employer the federal overtime rule is the only one that applies.
What to Do When a Rate Rises
A minimum wage increase is a payroll project, not a single field edit. In Arizona all three rates move on January 1, so you have one date to plan around. It also means one missed step affects the state, Flagstaff, and Tucson at the same time. Work the same sequence every year.
The step that gets skipped is the third one. A tipped cash wage that stays where it was in December is an underpayment from the first January shift, and it compounds quietly across a whole quarter before anyone notices.
Getting the rate right is the easy half. Keeping the paperwork that proves it right (offer letters, posted notices, acknowledgments, and four years of payroll records) is where small teams lose time. FirstHR keeps offer letters, signed acknowledgments, and other employee documents together on each employee profile, instead of in a folder nobody opens until an investigator asks.
Frequently Asked Questions
What is the minimum wage in Arizona right now?
It is $15.15 per hour, effective January 1, 2026. The Industrial Commission of Arizona announced the figure on September 29, 2025, a $0.45 increase over the 2025 rate of $14.70 driven by the change in the Consumer Price Index between August 2024 and August 2025. There is no headcount threshold, so the smallest payroll owes the same floor as the largest.
Can I count tips toward the minimum wage in Arizona?
Yes, up to $3.00 per hour, which puts the tipped cash wage at $12.15. The credit is conditional: your records of charged tips or the employee’s FICA declaration must show that wages plus tips reached the full minimum for every hour worked in each week. If a week falls short, you owe the difference in cash.
Which Arizona cities have their own minimum wage?
Flagstaff and Tucson. Flagstaff requires $18.35 per hour with no tip credit for anyone working 25 or more hours in a calendar year inside city limits, and it has published $18.95 for January 1, 2027. Tucson requires $15.45, with a maximum $3.00 tip credit, for anyone performing at least five hours of work per pay cycle inside the city. Everywhere else in Arizona follows the state rate.
What do I pay a 16 year old or a brand new hire in Arizona?
The full $15.15 per hour. Arizona has no youth, learner, or training wage, and no probationary rate. The federal youth minimum of $4.25 for the first 90 days for workers under 20 does not apply, because the higher state rate governs. Child labor rules still restrict a minor’s hours and duties.
Does Arizona have a fast food or healthcare minimum wage?
No. Arizona sets one statewide rate with no industry-specific minimum, and agriculture is covered at the same figure. The exclusions run by relationship and business size instead: employment by a parent or sibling, casual babysitting in the employer’s home, government employment, and a business under $500,000 in revenue that is also exempt from the federal minimum wage.
Do I have to post the minimum wage in Arizona?
Yes, for most employers. A.R.S. 23-364(D) requires the Industrial Commission’s Fair Wages and Healthy Families Act poster to be displayed where employees have access, and it is replaced every January when the rate changes. The one exemption in the Commission’s rules is for a business with annual revenue under $500,000, and it covers the poster, not the wage. You must also give each employee your business name, address, and telephone number in writing at hire, and keep four years of payroll records. Flagstaff and Tucson add their own city posters.
When does Arizona’s minimum wage go up again?
On January 1, 2027, though the statewide amount is not yet known. The Commission calculates it from the August-over-August change in the consumer price index and rounds to the nearest five cents. Flagstaff has already published $18.95 for that date. The state and Tucson figures are still outstanding, so treat any number circulating for those two as a projection.