Tipped minimum wage by state: 2026 rates and 2027 changes

The tipped minimum wage is the cash wage an employer pays before tips. Under federal law it's $2.13 an hour, with tips making up the rest of $7.25. Many states set it higher, 7 require the full minimum before tips, and 16 states change their rates on January 1, 2027.

How the tip credit works

Federal law lets an employer pay a tipped employee, someone who usually gets more than $30 a month in tips, a cash wage of $2.13 an hour and count up to $5.12 of their tips toward the $7.25 minimum. That $5.12 is the tip credit. If cash wage plus tips comes to less than the minimum for a workweek, the employer pays the difference. The employer has to tell staff about the tip credit in advance, and staff keep their tips, apart from a valid tip pool. See the Labor Department's fact sheet on tipped employees.

States can set a higher cash wage or a smaller tip credit, and some allow none. Where the state's rule and the federal one differ, the one better for the employee applies.

States where tipped staff get the full minimum before tips

In these 7 states, tips don't count toward the minimum wage: the employer pays the full rate in cash, and tips come on top.

• Alaska: $14.00 an hour.
• California: $16.90 an hour. A higher city or county minimum comes first.
• Minnesota: $11.41 an hour.
• Montana: $10.85 an hour. For businesses with yearly sales over $110,000. Smaller businesses the federal law doesn't cover: $4.00.
• Nevada: $12.00 an hour.
• Oregon: $15.55 an hour. Standard rate. Portland metro: $16.80. Nonurban counties: $14.55.
• Washington: $17.13 an hour.

Tipped minimum wage by state

Notes by state

• Alabama: No state minimum wage law: the federal rule applies.
• Connecticut: Bartenders who usually get tips: $8.23 cash wage, $8.71 tip credit.
• District of Columbia: The cash wage is at least 56% of the standard minimum.
• Florida: Since September 30, 2026: $15.00 less Florida's $3.02 tip credit. Set until December 31, 2027.
• Georgia: Georgia's own minimum wage law doesn't cover tipped staff: the federal rule applies.
• Hawaii: The tip credit is allowed only if wages plus tips come to at least $7.00 more than the minimum.
• Illinois: The tip credit is 40% of the minimum.
• Iowa: The tip credit is 40% of the minimum.
• Kansas: Kansas law doesn't cover jobs the federal wage law covers.
• Louisiana: No state minimum wage law: the federal rule applies.
• Maine: The tip credit is 50% of the minimum.
• Michigan: The tipped cash wage rises each year until it reaches 50% of the minimum in 2031.
• Mississippi: No state minimum wage law: the federal rule applies.
• Missouri: The tip credit is 50% of the minimum.
• New Jersey: Seasonal employers and those with fewer than 6 staff: $15.23 minimum. The tip credit needs advance notice to staff.
• New York: Tipped rates vary by region and type of employer: see New York's minimum wage overview.
• North Carolina: The tip credit needs a signed record of tips from each employee and advance notice.
• North Dakota: The tip credit is 33% of the minimum.
• Ohio: For employers with yearly gross receipts of $405,000 or more; smaller ones pay $7.25.
• Oklahoma: Oklahoma law doesn't cover jobs the federal wage law covers.
• South Carolina: No state minimum wage law: the federal rule applies.
• South Dakota: The tip credit is 50% of the minimum.
• Tennessee: No state minimum wage law: the federal rule applies.
• Texas: Texas law doesn't cover jobs the federal wage law covers.
• Utah: Utah law doesn't cover jobs the federal wage law covers.
• Vermont: The tip credit is 50% of the minimum.
• West Virginia: The tip credit is 70% of the minimum. For employers with 6 or more staff.
• Wyoming: Wyoming's own minimum is $5.15; staff covered by the federal law get the federal rate.

Some states set lower rates for minors, students or new hires, and some cities set a higher minimum than their state. The Labor Department's table leaves those out, and so does this one.

What changes in 2027

Each state's announced change, with the page it comes from:

• Arizona, January 1: minimum $15.65, tipped cash wage $12.65. Employers can pay tipped staff up to $3.00 an hour less, if tips make up the difference. Source
• California, January 1: minimum $17.40, no tip credit. A higher city or county minimum comes first. Source
• Colorado, January 1: minimum $15.71, tipped cash wage $12.69. Source
• Connecticut, January 1: minimum $17.48, tipped wage not announced yet. The 2027 tipped cash wage isn't confirmed yet (in 2026 it was $6.38 for restaurant staff and $8.23 for bartenders, set in state law). Source
• Maine, January 1: minimum $15.70, tipped cash wage $7.85. To be paid the tipped wage, a service employee now needs $199 a month in tips (up from $191). Source
• Michigan, January 1: minimum $15.00, tipped cash wage $6.30. The tipped cash wage is 42% of the minimum in 2027 and rises 2 points a year to 50% in 2031. Source
• Minnesota, January 1: minimum $11.87, no tip credit. Training wage for workers under 20: $9.68. Source
• Montana, January 1: minimum $11.20, no tip credit. Businesses not covered by federal wage law, with yearly sales of $110,000 or less: $4.00. Source
• Nebraska, January 1: minimum not announced yet, tipped wage not announced yet. A 1.75% raise set by state law (LB 258). The Labor Department must publish the new rate by October 15, 2026. Source
• New Jersey, January 1: minimum $16.48, tipped cash wage $6.61. Seasonal employers and employers with fewer than 6 staff: $16.25. The most tip credit is $9.87 an hour. Source
• Ohio, January 1: minimum $11.40, tipped cash wage $5.70. For employers with more than $419,000 a year in gross receipts. Smaller employers pay the federal minimum, $7.25. Source
• Rhode Island, January 1: minimum $17.00, tipped cash wage $3.89. Source
• South Dakota, January 1: minimum not announced yet, tipped wage not announced yet. Raised each year with the cost of living; the state posts the new rate by October 15, 2026. The tipped cash wage is half of it. Source
• Vermont, January 1: minimum not announced yet, tipped wage not announced yet. Raised at the start of each year under state law (21 V.S.A. § 384). The tipped wage is half of the new minimum. Source
• Virginia, January 1: minimum $13.75, tipped cash wage $2.13. Virginia sets no tipped wage of its own: the federal $2.13 cash wage applies to most employers, and tips must make up the rest. $15.00 from January 1, 2028. Source
• Washington, January 1: minimum $17.73, no tip credit. Source
• Alaska, July 1: minimum not announced yet, no tip credit. A step already set in state law; from January 1, 2028 the wage follows inflation. Source
• District of Columbia, July 1: minimum not announced yet, tipped wage not announced yet. Raised each July 1 with inflation. The tipped cash wage is 56% of the new minimum. Source
• Oregon, July 1: minimum not announced yet, no tip credit. Raised each July 1 with inflation. Oregon has three rates: standard, Portland metro and nonurban counties. Source

Put your state's and city's dates in your calendar with the free deadline calendar, with a reminder before each one.

What the raise costs you

The cost of a tipped wage raise is the rise per hour times your tipped staff's hours. Your share of Social Security and Medicare, 7.65% of pay (6.2% plus 1.45%, per the IRS), goes up with it.

To see what labor costs you as a share of sales after the raise, use the free labor cost calculator, and see restaurant labor cost percentage for the targets by type.

Common questions

What is the federal tipped minimum wage?

$2.13 an hour in cash, with up to $5.12 counted from tips toward the $7.25 federal minimum. It applies where a state sets nothing higher.

Which states don't allow a tip credit?

Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington. There, the full state minimum is owed before tips.

What happens if tips don't make up the minimum?

The employer pays the difference, so that cash wage plus tips reaches at least the minimum for the hours worked that week.

Does “no tax on tips” change the tipped minimum wage?

No. It's an income tax deduction for people who get tips; it doesn't change what an employer has to pay. What it means for restaurant owners.

Is later in 2027 covered?

Where a state has said when its next change comes, yes: Alaska, District of Columbia, Oregon change on July 1, 2027, at rates not announced yet. We add rates as states publish them.