Arizona Minimum Wage: State and Local Rates

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 an hour of work has to be paid for in Arizona, at the state level and in the two cities that raise the floor. Overtime, sick leave, final pay, and the rest of the picture sit in the Arizona HR compliance guide.

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 between August 2024 and August 2025.

The formula lives in A.R.S. 23-363, the wage section of the Fair Wages and Healthy Families Act that voters approved as Proposition 206. The rate rises each January 1 by the August over August change in the consumer price index for all urban consumers, U.S. city average, all items, rounded to the nearest five cents. No legislative action is involved, and the rate cannot fall.

The tipped column is the standard rate less the $3.00 maximum tip credit, which is a fixed dollar figure rather than a percentage. The pattern in the left column is the part worth internalizing: the increase is modest, it is never skipped, and it arrives on the same date every year.

When the Rate Changes Next

The next Arizona increase takes effect January 1, 2027, and the amount has not been published. The Commission cannot calculate it until the Bureau of Labor Statistics releases the August 2026 index in the middle of September, so there is no official 2027 figure to plan against yet.

Recent practice gives a dependable calendar. The 2026 rate was announced on September 29, 2025, and prior years have landed in the same late September to early October window. 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 and Tucson run the same August over August consumer price index formula on the same January 1 calendar, so all three of the numbers an Arizona employer cares about are settled in 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. A.R.S. 23-363(C) permits it only where the employer can establish, from its records of charged tips or from the employee’s declaration for FICA purposes, that wages plus tips reached at least the full minimum wage for every hour worked in each week. Compliance is measured week by week, averaged across the payroll period.

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. Our guide to minimum wage for tipped employees walks through how the same test works under federal law, which uses a different maximum credit.

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 mid week.

Flagstaff is the outlier on both counts. 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. That was the end of a phase down written into Chapter 15-01 of the city code, where the permitted tipped differential shrank from $3.00 to $2.50, then $2.00, then $1.50, then $1.00 for 2025, with nothing scheduled after that.

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 they are short. Everything not listed there is covered.

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 be exempt from having to pay a minimum wage under section 206(a) of the Fair Labor Standards Act, and federal coverage reaches a great many small operations through the work individual employees do in interstate commerce.

Treat it 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.

The federal youth minimum of $4.25 per hour for the first 90 consecutive calendar days of employment for workers under 20 does exist under the Fair Labor Standards Act. It simply never applies here: where a state sets a higher minimum, the employee receives the higher rate, which is the rule the US Department of Labor applies across its consolidated state minimum wage tables. Neither Flagstaff nor Tucson sets a youth rate either.

There is also no certificate route to a lower rate. 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 sub minimum wages to employees.

Posting and Notice Requirements

Arizona does require a minimum wage poster. 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, which means it needs swapping every January.

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, and failing to do so raises a rebuttable presumption that you did not pay the required rate. Our guide to payroll records covers what that retention looks like in practice.

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, and adverse action 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 has not moved since. Arizona’s rate is more than double it, 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 has no state overtime statute of its own, so the federal test is the only one that applies.

For the mechanics of the federal floor, see our federal minimum wage guide. To see where Arizona sits against the rest of the country and which states move next, the minimum wage increase tracker keeps the comparison in one place.

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, which is convenient in one sense and dangerous in another: one missed step affects the state, Flagstaff, and Tucson at the same time. Work the same sequence every year.

The step teams skip 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 that documentation attached to the employee record, so an updated rate flows into onboarding materials instead of sitting 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. 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. 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, so it is replaced every January. 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 amount is not yet known. The Commission calculates it from the August over August change in the consumer price index, and the August index is not published until mid September. As of the last review of this page, no 2027 rate had been announced, so any figure circulating now is a projection.