Arizona Minimum Wage & Overtime

Under the Fair Wages and Healthy Families Act (Proposition 206), Arizona's minimum wage is $15.15/hour effective January 1, 2026(up from $14.70), indexed annually to the cost of living (A.R.S. § 23-363). That is more than double the federal $7.25.

Two cities set their own higher minimum wage: Flagstaff is $18.35 (and eliminated the tip credit as of January 1, 2026, so the full wage is owed to all employees), and Tucson is $15.45. Always apply the rate for the city where the work is performed.

Arizona allows a tip credit of up to $3.00/hour — a cash wage of $12.15 statewide ($12.45 in Tucson) — but only if the employee's tips bring total pay to at least the full $15.15 minimum each pay period, and tip records are kept. Flagstaff allows no tip credit.

Arizona has no state overtime law — the federal FLSA governs: 1.5× the regular rate after 40 hours in a workweek, with no daily overtime. The white-collar exemption follows the federal duties tests and the $684/week ($35,568/yr)salary level (29 U.S.C. § 207; 29 C.F.R. Part 541) — Arizona adds no higher salary threshold.

Check the locality before setting pay, fold the annual indexing into your January payroll review, keep tip records if you take the credit, and classify exempt vs. non-exempt under the federal tests. Unpaid minimum-wage or overtime amounts can carry steep penalties (see our final-pay guide on treble damages).