Arizona minimum wage in 2026 (and 2027)

Who gets $15.15, and who can be paid less in cash

The U.S. Department of Labor's state summary lists Arizona's basic rate at $15.15 with no small-employer exception, so a two-person shop pays the same floor as a chain store. Because the state rate is above the federal $7.25, the state rate is the one you owe.

Tipped staff are the main exception in cash terms. You can pay a tipped employee a cash wage of $12.15 an hour and count up to $3.00 an hour of tips toward the minimum, according to the DOL tipped wage table. If tips in a pay period fall short, you make up the difference so the worker still averages at least $15.15. Restaurants that run tip pools or serve alcohol should read our restaurant payroll software picks, since tip credit tracking is where hourly payroll most often goes wrong.

For overtime, the federal Fair Labor Standards Act rule applies: 1.5 times the regular rate after 40 hours in a workweek.

Flagstaff and Tucson have their own rates

Flagstaff and Tucson each set a city minimum wage, and an employer pays the city rate for hours worked inside city limits when it is higher than the state rate. We could not read either city's official wage page when we checked in October 2026, so we do not quote a figure here. The ICA minimum wage page does not list local rates either.

$15.15 an hour by the week, month and year

Using a 40-hour week and 52 weeks (2,080 hours a year):

• Week: 40 x $15.15 = $606.00
• Year: 2,080 x $15.15 = $31,512.00
• Month: $31,512.00 / 12 = $2,626.00

If the reported $15.65 rate for 2027 (a secondary source, FreshPlaza, September 17, 2026) holds, the annual figure becomes 2,080 x $15.65 = $32,552.00, an increase of $1,040.00 per full-time worker. Budget for it now and confirm the number when the ICA posts its 2027 poster.

What an Arizona employer pays on top of wages

The wage is not the whole bill. For one full-time employee earning $31,512.00 in a first year:

• Social Security and Medicare (FICA), employer share 7.65%: $2,410.67
• Federal unemployment (FUTA), 0.6% on the first $7,000: $42.00
• Arizona unemployment tax, new employer rate 2.00% on the $8,000 wage base: $160.00 (Arizona Department of Economic Security)

That adds $2,612.67, for a total of $34,124.67 before workers' compensation insurance and any benefits. Arizona has no state disability or paid leave payroll tax, so there is nothing else to withhold or match on the state side beyond income tax withholding. The unemployment rate changes once your account has its own claims history; see 2026 unemployment tax rates by state. To run the same math for a different wage, use the employee cost calculator.

Paying the Arizona rate without missing a change

When the Arizona rate changes, the risk is forgetting to update pay rates for the first payroll of the year. Payroll software that tracks state minimums will flag workers who fall below the new floor. Gusto's Simple plan costs $49 a month plus $6 per person (checked October 16, 2026), and Gusto remits the payroll taxes it calculates, including Arizona withholding and unemployment. Compare it with other options in our payroll software rankings or see what payroll services cost.

For the rest of the state picture, including withholding on Form A-4 and new hire reporting, read Arizona payroll taxes. If you would rather hand off payroll and HR entirely, a PEO in Arizona takes on the filings for a per-employee fee.