Arizona’s minimum wage increased to $14.70 per hour on January 1, 2025, marking another adjustment under the state’s Fair Wages and Healthy Families Act, which ties annual wage increases to the Consumer Price Index (CPI).
The state’s tipped minimum wage also rose to $11.70 per hour, allowing employers to claim a tip credit of up to $3.00 per hour, provided the combined cash wage and tips meet or exceed the standard minimum wage.
With these changes, Arizona workers earning hourly wages — both tipped and non-tipped — are seeing slightly higher paychecks, while employers are reminded to remain vigilant in complying with state labor laws to avoid penalties.
Overtime Pay Adjustments
Under the federal Fair Labor Standards Act (FLSA), non-exempt employees working beyond 40 hours per week are entitled to 1.5 times their regular pay. This makes the 2025 overtime rate for Arizona minimum wage workers $22.05 per hour.
Employers are required to accurately track tipped wages to ensure that all employees, including those relying on tips, receive fair compensation in accordance with state and federal regulations.
Minimum Wage Rates Across Arizona Cities
While most cities across Arizona follow the statewide minimum wage, certain cities, like Flagstaff, have established higher local rates. Below is a breakdown:
| City | Non-Tipped Employees | Tipped Employees |
|---|---|---|
| Phoenix | $14.70/hour | $11.70/hour |
| Tucson | $15.00/hour | $11.70/hour |
| Mesa | $14.70/hour | $11.70/hour |
| Chandler | $14.70/hour | $11.70/hour |
| Flagstaff | $17.85/hour | $16.85/hour |
| (Other AZ cities) | $14.70/hour | $11.70/hour |
Salary Thresholds for Exempt Employees
The U.S. Department of Labor (DOL) had proposed new salary thresholds for employees classified as exempt under executive, administrative, and professional (EAP) roles. The proposed threshold was set to $1,128 per week ($58,656 annually), with Highly Compensated Employees (HCE) requiring an annual salary of $151,164.
However, those changes were blocked by a federal court ruling in late 2024, meaning the current thresholds under the 2019 regulations remain in effect:
- EAP Exemption: $684 per week ($35,568 annually)
- HCE Exemption: $107,432 annually
Employees earning below these thresholds are entitled to overtime pay unless they meet exemption criteria under FLSA rules.
Who Is Exempt from Arizona’s Minimum Wage?
Not all workers in Arizona are covered by the state’s minimum wage laws. The following categories are exempt:
- Individuals employed by a parent or sibling
- Occasional babysitters working in a private home
- State and federal government employees
- Employees of small businesses with less than $500,000 in annual revenue, provided they are not subject to the federal minimum wage
Employer Compliance is Critical
Arizona labor officials are urging businesses to ensure full compliance with wage laws, as violations may result in strict penalties. Workers with concerns about wage violations are encouraged to contact the Arizona Industrial Commission for assistance.
