Arizona Minimum Wage 2026: $15.15 an Hour, Indexed Every January
Arizona minimum wage is $15.15 an hour in 2026, with a $12.15 tipped cash wage, higher local rates in Flagstaff ($18.35) and Tucson ($15.45), and an automatic CPI increase every January 1.
The Arizona minimum wage is $15.15 per hour as of January 1, 2026. Tipped employees can be paid a cash wage of $12.15 per hour as long as tips bring them to $15.15. Two cities set higher floors: Flagstaff at $18.35 and Tucson at $15.45. The state rate is adjusted for inflation every January 1 under the Fair Wages and Healthy Families Act, so the 2027 figure will be announced by the Industrial Commission of Arizona in the fall of 2026.
Reviewed September 2026
Rates on this page were checked against the Industrial Commission of Arizona and the US Department of Labor state minimum wage tables as of July 1, 2026. The Commission publishes the following year's rate each October. Confirm the current figure before running payroll, and see our labor law compliance guides for other Arizona rules.
Current Arizona Minimum Wage
Arizona's statewide minimum wage rose from $14.70 to $15.15 on January 1, 2026, an increase of 45 cents. The Industrial Commission of Arizona sets the figure each year by applying the change in the Consumer Price Index between August of the prior two years, as required by Proposition 206, the Fair Wages and Healthy Families Act that voters approved in 2016.
The rate applies to almost every employer in the state. Arizona's law covers any business with employees except the State of Arizona itself, the federal government, and small businesses with less than $500,000 in annual gross revenue that are not covered by the federal Fair Labor Standards Act. In practice, that last exemption is narrow, because nearly any business that handles goods or payments that crossed state lines is covered by the FLSA.
Arizona is one of the states where the minimum wage keeps climbing without new legislation. Because the adjustment is tied to inflation, employers should budget for a rate change every January and update pay rates, postings, and timekeeping systems before the first pay period of the year.
Arizona Minimum Wage vs Federal Minimum Wage
| Arizona 2026 | Federal (FLSA) | |
|---|---|---|
| Standard hourly minimum | $15.15 | $7.25 |
| Tipped cash wage | $12.15 | $2.13 |
| Maximum tip credit | $3.00 | $5.12 |
| Annual adjustment | Yes, CPI, every January 1 | No, unchanged since 2009 |
| Youth or training wage | None | $4.25 for under-20s in the first 90 days |
| Local rates allowed | Yes (Flagstaff, Tucson) | Not applicable |
When state and federal rules differ, the employee gets the higher rate. Arizona's $15.15 is more than double the federal $7.25, so the federal figure only matters for the handful of employers outside both laws' coverage.
Tipped Minimum Wage in Arizona
Arizona allows a tip credit of up to $3.00 per hour, which is a fixed dollar amount rather than a percentage. That means the tipped cash wage moves with the statewide rate: $12.15 in 2026, up from $11.70 in 2025. The employer must be able to show that each tipped employee's cash wage plus tips averaged at least $15.15 per hour for every workweek. If tips fall short, the employer pays the difference.
A few rules make Arizona stricter than the federal tip credit:
- The employee must actually receive the tips. Employers cannot keep tips or require sharing with managers.
- Records must show tips received, because the $3.00 credit is only valid when the combined figure clears the minimum.
- Tucson allows the same $3.00 credit against its higher local rate, so the Tucson tipped cash wage is $12.45.
- Flagstaff eliminated its tip credit, so tipped employees in Flagstaff must receive the full $18.35 local minimum in cash wages before tips.
Arizona Minimum Wage Increase Schedule
Arizona set fixed steps through 2020 under Proposition 206, then switched to inflation indexing. The history since 2021 shows how much the rate has moved.
| Effective date | Statewide rate | Tipped cash wage |
|---|---|---|
| January 1, 2021 | $12.15 | $9.15 |
| January 1, 2022 | $12.80 | $9.80 |
| January 1, 2023 | $13.85 | $10.85 |
| January 1, 2024 | $14.35 | $11.35 |
| January 1, 2025 | $14.70 | $11.70 |
| January 1, 2026 | $15.15 | $12.15 |
| January 1, 2027 | CPI adjustment, announced fall 2026 | Rate minus $3.00 |
Increases are rounded to the nearest five cents. Because the formula uses the August-to-August CPI change, employers can estimate the next year's rate from the September CPI release before the Commission's formal announcement.
Local Minimum Wages in Arizona
Arizona is unusual among western states in allowing cities to set their own minimum wage. Two have done so.
| Jurisdiction | 2026 minimum wage | Tipped cash wage | Adjustment |
|---|---|---|---|
| Statewide | $15.15 | $12.15 | CPI, January 1 |
| Flagstaff | $18.35 | $18.35 (no tip credit) | CPI, January 1 |
| Tucson | $15.45 | $12.45 | CPI, January 1 |
Flagstaff's rate comes from a 2016 ballot measure that set a path to $15 and then indexing, with the added goal of staying $2 above the state rate. Tucson's rate comes from the city's own Proposition 206, passed in November 2021, which reached $15 in 2025 and now adjusts annually. Employers with staff in more than one Arizona city need to track where each employee physically works, because the local rate follows the work location, not the company's address.
Sources for local rates: City of Flagstaff minimum wage page and the Tucson Minimum Wage Act.
Who Is Covered and Who Is Exempt
Arizona's minimum wage law is broader than the federal one. It covers full-time, part-time, and temporary employees regardless of age, and it has no training wage or youth rate. The exemptions are short:
- Employees of the State of Arizona and the United States government
- Small businesses with under $500,000 in gross annual revenue that are exempt from the FLSA
- People employed by a parent or sibling
- Babysitters working casually in the employer's home
Independent contractors are not employees and are not covered, but misclassifying an hourly worker as a contractor does not remove the obligation. Whether a salaried worker is owed overtime is a separate question governed by the FLSA duties tests; see our guide to exempt vs non-exempt employees.
Overtime and the Minimum Wage
Arizona has no state overtime statute, so the federal rule applies: non-exempt employees earn 1.5 times their regular rate for hours over 40 in a workweek. There is no daily overtime threshold in Arizona.
For a minimum wage employee working 45 hours in a week:
- 40 hours at $15.15 = $606.00
- 5 overtime hours at $22.73 (1.5 times $15.15) = $113.63
- Weekly gross pay = $719.63
In Flagstaff the same week at $18.35 comes to $734.00 plus $137.63 in overtime, or $871.63. Our overtime calculator handles any rate, and the overtime pay laws by state guide covers the federal rules in detail.
What a Minimum Wage Worker Earns in Arizona
| Schedule | Statewide $15.15 | Tucson $15.45 | Flagstaff $18.35 |
|---|---|---|---|
| 40-hour week | $606.00 | $618.00 | $734.00 |
| Month (173.33 hours) | $2,625.95 | $2,677.95 | $3,180.61 |
| Year (2,080 hours) | $31,512 | $32,136 | $38,168 |
These are gross figures before taxes and deductions. Use the salary to hourly calculator to convert in either direction, and see what gross pay includes for how overtime and tips fit in.
Employer Compliance Checklist
- Update every hourly rate below $15.15 (or the local rate) before the first January pay period, and check again each October when the Commission announces the next year's figure.
- Post the current Industrial Commission of Arizona minimum wage notice where employees can see it.
- Track work location for employees who work in Flagstaff or Tucson, even part of the week.
- Keep tip records that show each tipped employee reached $15.15 per hour in every workweek, and pay the difference when they did not.
- Record all hours worked to the minute with a time card calculator or time tracking software; Arizona law requires employers to keep payroll records for four years.
- Review the Arizona labor law guide for paid sick time, which the same Proposition 206 requires.
Track Hours and Rates Across Arizona Locations
HiveDesk records clock-in and clock-out times for every employee and location, so a Flagstaff shift and a Phoenix shift are paid at the right rate. $5/user/month, 14-day free trial.
Frequently Asked Questions
What is the minimum wage in Arizona in 2026?
$15.15 per hour statewide, effective January 1, 2026. Flagstaff ($18.35) and Tucson ($15.45) are higher.
Will Arizona minimum wage go up in 2027?
Almost certainly. The rate is adjusted every January 1 by the change in the Consumer Price Index. The Industrial Commission of Arizona announces the new figure each October. If inflation is zero or negative the rate stays the same; it never goes down.
What is the tipped minimum wage in Arizona?
$12.15 per hour in 2026. Employers may take a tip credit of up to $3.00 per hour, but only if tips bring the employee to at least $15.15. Flagstaff does not allow a tip credit.
Does Arizona have a training wage or youth minimum wage?
No. Arizona's law covers employees of any age at the full rate. The federal $4.25 youth wage does not apply because the state rate is higher.
Is the Arizona minimum wage $15 or $15.15?
$15.15. The rate passed $15 on January 1, 2026 after the 2025 CPI adjustment.
What is the minimum wage in Phoenix?
Phoenix uses the statewide rate of $15.15. Only Flagstaff and Tucson have local ordinances.
Do small businesses have to pay Arizona minimum wage?
Yes, unless the business earns under $500,000 a year and is not covered by the FLSA. Most small businesses are FLSA-covered because they handle goods or payments in interstate commerce, so the exemption rarely applies.
How much is Arizona minimum wage per year?
$31,512 for a full-time employee working 2,080 hours at $15.15, before taxes.
For a comparison with every other state, see minimum wage by state.