Restaurant Labor Costs in Arizona
Arizona’s minimum wage is $15.15 an hour, and the state allows a fixed tip credit of $3.00, giving a minimum cash wage of $12.15 for tipped employees. The flat differential makes Arizona one of the more straightforward states to model, since the gap between tipped and untipped cash wages stays constant as the minimum rises.
Figures verified July 2026
Statutory rates
| Rate | Per hour | Source |
|---|---|---|
| State minimum wage | $15.15/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Minimum cash wage (tipped employees) | $12.15/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Maximum tip credit1 | $3.00/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
1 A fixed differential rather than a percentage.
Next scheduled change: 1 January 2027. Arizona adjusts its minimum wage annually, effective 1 January.
On role-level pay data
Median pay by role for Arizona is in the Bureau of Labor Statistics state estimates, linked below. Phoenix and Tucson dominate the sample, so rural operators should expect to sit under the published median.
From an hourly rate to a labor cost percentage
The rates above are what you may not pay below. What an hour costs you is larger, once the on-costs below are added, and the labor cost percentage calculator will turn the two halves into a figure you can compare. The prime cost calculator then tells you whether that number and your food cost together leave room for rent and profit.
Tips and tip handling
Arizona uses a fixed $3.00 tip credit rather than a percentage, so tipped employees receive at least $12.15 in cash against the $15.15 minimum. Tips still have to bring each employee to the full minimum, and the differential stays at $3.00 as the headline rate moves, which makes forward modelling simpler here than in percentage-credit states.
If you need to write this down for your team, the tip-out policy generator produces a plain-language policy document, and the tip-out calculator handles the nightly split.
What else drives your labor cost here
A flat differential is easy to plan against
Arizona's $3.00 tip credit is a fixed amount rather than a percentage, so the gap between tipped and untipped cash wages stays constant as the headline rate climbs. Forward modelling is genuinely simpler here than in percentage-credit states.
Winter season distorts the annual view
Visitor markets carry a demand curve steep enough that a yearly labor percentage hides more than it shows. Measure the season separately from the rest of the year.
Payroll taxes and benefits
Employer payroll taxes, unemployment insurance and workers' compensation all sit on top of gross wages and rise with the annual increase.
For what your percentage should be measured against, see the cost benchmarks by type of food business.
Run your own numbers
Frequently asked questions
What is the minimum wage in Arizona?
$15.15 an hour, with a minimum cash wage of $12.15 for tipped employees under a fixed $3.00 tip credit.
How does Arizona’s tip credit work?
It’s a flat $3.00 differential rather than a percentage, so tipped staff receive $3.00 less per hour in cash than the standard minimum, provided tips make up the difference.
Labor costs elsewhere
- Restaurant Labor Costs in the United StatesFederal floor, the tip credit, BLS median pay by role, and the national benchmarks.
- Restaurant Labor Costs in ColoradoAn indexed state rate, a fixed tip credit, and a separate Denver ordinance.
- Restaurant Labor Costs in TexasFederal floor, full tip credit, and a market rate well above both.
Rates on this page are reproduced from the government sources listed below and were last checked on 20 July 2026. They are published for orientation and are not legal advice — before you set pay, confirm the current figure against the primary source for your jurisdiction, including any local ordinance that may exceed it. The headline rate at time of writing was $15.15 per hour.
Sources
- U.S. Department of Labor, Wage and Hour Division — Minimum Wages for Tipped EmployeesRevised 1 January 2026 · Government / statistical