Hourly vs salary paychecks in Arizona: How to calculate correctly

Understanding your paycheck in Arizona isn’t always straightforward. Whether you’re paid hourly or earn a fixed salary, your take-home pay depends on more than just the number on your job offer. State tax rules, federal deductions, and overtime laws all shape what ends up in your bank account. This guide explains the difference between hourly and salary paychecks in Arizona and shows you how to calculate them step by step.

What Is the Difference Between Hourly and Salary Pay in Arizona?

• Hourly pay means you are paid for each hour you work. If you work overtime (more than 40 hours per week), you are usually entitled to 1.5× your hourly rate. Arizona follows federal FLSA standards.
• Salary pay means you receive a fixed amount each year, divided into regular paychecks. Some salaried workers are exempt from overtime, while others still qualify depending on job classification and income.

Both systems are common in Arizona, but the way you calculate your paycheck differs.

Step 1: Calculate Gross Pay

Hourly example

• $20/hour × 40 hours = $800 weekly gross pay
• If you work 45 hours: $20 × 40 = $800 + ($30 × 5) = $950 gross

Salary example

• $52,000 per year ÷ 26 biweekly pay periods = $2,000 gross per paycheck

To quickly estimate your numbers, try this land loan payment calculator which works similarly by breaking large amounts into smaller scheduled payments.

Step 2: Subtract Federal Taxes and FICA

Every Arizona paycheck includes federal deductions:

• Social Security tax: 6.2% of gross pay (up to the annual wage base)
• Medicare tax: 1.45% of gross pay
• Federal income tax: varies by filing status and withholding selections

Step 3: Apply Arizona State Income Tax

Arizona has a flat state income tax of 2.5% in 2025. Employees also file Form A-4, which lets you choose a withholding percentage between 0.5% and 3.5%. If you don’t submit a form, the default is 2.0%.

Example:

• $800 gross × 2.5% = $20 withheld for state tax

You can also compare with other costs like closing fees using a land loan closing cost calculator, since both taxes and fees reduce what you keep.

Step 4: Account for Pre-Tax and Post-Tax Deductions

Your paycheck may also change if you contribute to:

• Retirement plans (401k, IRA)
• Health insurance premiums
• Wage garnishments or union dues

These deductions reduce taxable income before the final net pay is calculated.

Step 5: Determine Net Pay

After subtracting all taxes and deductions, you arrive at your net pay, or take-home pay.

Example comparison:

Pay Type	Gross Pay	Net Pay (approx.)
$20/hr, 40 hrs/wk	$800	~$640–$670
$52,000 salary/yr	$2,000	~$1,600–$1,650

(Exact numbers depend on federal withholding elections and personal deductions.)

For long-term planning, it helps to look at schedules. Tools like a land loan repayment schedule calculator use similar breakdowns to show how income or debt spreads over time.

Arizona-Specific Considerations

• Minimum wage: $14.35/hour in 2025 (higher in some cities).
• Overtime: Required for hourly non-exempt employees over 40 hours per week.
• Pay frequency: Most Arizona employers pay biweekly or semimonthly.
• Form A-4: Determines how much state tax is withheld.

Which Is Better: Hourly or Salary?

• Hourly pay works well if you want flexibility and expect overtime opportunities.
• Salary pay provides predictable income and often comes with benefits, but it may not increase with extra hours worked.

Your choice depends on job role, lifestyle, and income stability needs.

FAQs

How do I calculate my paycheck if I’m paid hourly in Arizona?
Multiply your hourly rate by hours worked, add overtime if applicable, then subtract taxes and deductions.

Do salaried employees in Arizona get overtime?
Only if they are non-exempt under federal law; many salaried workers are exempt.

What taxes are taken out of Arizona paychecks?
Federal income tax, Social Security, Medicare, and Arizona’s flat state tax (2.5%).

How does Arizona Form A-4 affect my paycheck?
It lets you choose your withholding rate; higher percentages mean more taken out per paycheck.

Is it better to be paid hourly or salary in Arizona?
Hourly is better if you want overtime pay; salary is better if you prefer stability and benefits.