Arizona tip pooling laws & tipped minimum wage
In Arizona, employers can pay tipped workers $12.15/hr as long as tips bring them to the $15.15 minimum — here's how that works and who can legally share your tips.
| Regular minimum wage | $15.15/hr |
| Minimum cash wage for tipped workers | $12.15/hr |
| Maximum tip credit | $3.00/hr |
| Tips belong to | Employees — always |
A tip credit lets an employer count your tips toward the minimum wage it owes you. Rates reviewed July 2026. Rates change — confirm with the Arizona labor department. Not legal advice.
What's specific to Arizona
Arizona caps the tip credit at a flat $3.00/hr and adjusts its minimum wage for inflation every January.
Arizona caps the tip credit at a flat $3.00 an hour
Arizona does not use the federal $2.13 tipped cash wage. Instead, under the Fair Wages and Healthy Families Act (Proposition 206, passed in 2016), an employer may pay a tipped worker up to $3.00 an hour below the state minimum — a flat dollar cap, not a percentage. With the 2026 state minimum at $15.15, that puts the tipped cash wage at $12.15 an hour.
The $3.00 credit only holds if your tips actually make up the difference. Your cash wage plus tips must average at least the full $15.15 for every hour in the workweek; if they do not, your employer has to pay the shortfall.
The minimum rises every January for inflation
Proposition 206 ties Arizona’s minimum wage to inflation. The Industrial Commission of Arizona recalculates it each fall using the Consumer Price Index and announces the new rate, which takes effect the following January 1. The wage rose from $14.70 in 2025 to $15.15 on January 1, 2026, so the tipped floor moved with it to $12.15.
The Industrial Commission of Arizona is also the agency that enforces the Act. If your employer takes more than the $3.00 credit, or your pay plus tips falls below the state minimum, you can file a complaint with the Commission.
Flagstaff sets a higher wage — and no longer allows a tip credit
The city of Flagstaff has its own, higher minimum wage under a local ballot measure. For 2026 it is $18.35 an hour, and as of January 1, 2026 Flagstaff eliminated the tipped wage entirely: every worker, tipped or not, must be paid the full $18.35 in cash, with tips on top.
So if you work in Flagstaff, do not use the statewide $12.15 tipped figure — your employer owes the full city minimum in wages regardless of how much you earn in tips.
Tip pooling in Arizona
Arizona follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $12.15/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
One federal rule applies everywhere: managers and supervisors can never take from a tip pool. Separately, credit card processing fees may only be deducted from tips where state law allows it.
What this means for your tip-out
Because part of your legal wage in Arizona comes from tips, the employer's tip credit assumes those tips reached you. Use the tip-out calculator to split a shift by your house's percentages or by hours, and see standard tip-out percentages to check whether your house's rates are typical.
Arizona tip law FAQs
What is the tipped minimum wage in Arizona?
Employers in Arizona may pay tipped employees a cash wage of $12.15/hr and claim a tip credit of up to $3.00/hr toward the $15.15 minimum wage. If tips don't close the gap in a workweek, the employer must make up the difference.
Is mandatory tip pooling legal in Arizona?
Arizona follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $12.15/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
Can my manager take a share of the tip pool in Arizona?
No. Federal law prohibits managers, supervisors, and owners from keeping any portion of employee tips in every state, including Arizona. A manager may keep only tips they directly and solely earned (e.g., a table they personally served start to finish).
How much can an Arizona employer take as a tip credit?
No more than $3.00 an hour, a flat cap set by Proposition 206. In 2026 that means a tipped cash wage of $12.15 against the $15.15 state minimum, and only if your tips bring you to at least $15.15 an hour for every hour worked. Otherwise your employer must make up the difference.
Is the tipped wage different in Flagstaff?
Yes. Flagstaff’s 2026 minimum wage is $18.35 an hour, and as of January 1, 2026 the city no longer allows any tip credit. Tipped workers there must be paid the full $18.35 in cash, with tips kept entirely on top.