Effective January 1, 2025, Arizona’s minimum wage will be increased by 35 cents from $14.35 to $14.70 per hour. Arizona law requires the minimum wage to increase yearly based on the percentage increase in the consumer price index as of August of each year.
The federal minimum wage remains at $7.25 per hour, but Arizona employers must pay employees the higher rate defined by Arizona law. The law also provides that when the minimum wage requirement in a locality is higher than the State minimum wage, the higher wage rate applies. Since the City of Tucson has a minimum wage rate of $15 per hour, employees working in Tucson city limits must be paid the higher rate of $15 per hour.
The Arizona minimum wage laws do not apply to the following:
- Any person employed by a parent or sibling
- Any person performing babysitting services in the employer’s home on a casual basis
- Any person employed by the state of Arizona or the United States government
- Any person employed by a small business that grosses less than $500,000 in annual revenue (if the business is exempt from paying minimum wage under US law).
Employers may pay tipped employees a maximum of $3 per hour less than minimum wage if their records show that for each week, when adding tips received to wages paid, the employee received not less than minimum wage for all hours worked.
Even though only around 3% of Arizonans earn the minimum wage, employers are required to display the 2025 minimum wage poster in a place that is accessible to employees.
Please feel free to contact one of our tax professionals if you have any questions related to Arizona minimum wage requirements.
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