US Minimum Wage 2026: Federal + State-by-State Guide

Quick Answer: What Is the US Minimum Wage in 2026?

The federal minimum wage is $7.25 per hour, unchanged since July 24, 2009. However, 30 states plus the District of Columbia mandate higher minimum wages, and dozens of cities and counties set even higher local rates.

When federal and state rates differ, employers must pay the higher of the two rates. This is not optional -- the FLSA section 218(a) explicitly preserves state and local laws that provide greater protections.

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A Brief History of the Federal Minimum Wage

The federal minimum wage was established by the Fair Labor Standards Act of 1938 at $0.25 per hour. It has been raised 22 times since then, with the most recent increase taking effect on July 24, 2009, from $6.55 to $7.25.

That means the current federal minimum wage has been frozen for over 16 years -- the longest period without an increase since the FLSA was enacted. Adjusted for inflation (using the Bureau of Labor Statistics CPI calculator), $7.25 in 2009 has the purchasing power of roughly $5.20 in 2009 dollars when measured against 2026 prices, meaning low-wage workers relying solely on the federal floor have experienced a significant real-wage decline.

Key Legislative Milestones

• 1938: FLSA establishes $0.25/hour minimum
• 1961: Coverage expanded to retail, service, construction, and transit workers
• 1966: Coverage extended to state and local government employees, hospitals, nursing homes, schools
• 1991: Raised to $4.25 (from $3.80)
• 1997: Raised to $5.15 (from $4.75)
• 2007: Fair Minimum Wage Act of 2007 phased in three increases: $5.85 (2007), $6.55 (2008), $7.25 (2009)
• 2009-present: No federal increase

Multiple bills have been introduced to raise the federal minimum (including the Raise the Wage Act proposing $15/hour), but none have passed both chambers of Congress as of March 2026.

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State-by-State Minimum Wage Rates (2026)

The following table lists the minimum wage in all 50 states plus DC. States marked with an asterisk (*) have automatic annual adjustments tied to the Consumer Price Index (CPI) or another inflation measure.

20 states still rely on the federal $7.25 floor (either matching it exactly or having no state law). The remaining 30 states plus DC have enacted higher rates, with many now adjusting automatically for inflation.

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Tipped Minimum Wage

Under the FLSA section 203(m), employers may pay tipped employees a cash wage of $2.13 per hour provided that the employee regularly receives more than $30 per month in tips and the combined amount (cash wage + tips) equals at least the applicable minimum wage.

This is known as the tip credit. The maximum federal tip credit is $5.12 ($7.25 minus $2.13).

States That Have Eliminated the Tip Credit

Seven states require employers to pay the full state minimum wage before tips:

• Alaska ($11.91)
• California ($16.50)
• Minnesota ($11.13)
• Montana ($10.55)
• Nevada ($12.00)
• Oregon ($14.70)
• Washington ($16.66)

In these states, tips are entirely supplemental income on top of the full minimum wage.

Employer Obligations Under the Tip Credit

1. Inform the employee in advance about the tip credit provisions
2. Track tips -- if an employee's tips plus cash wage fall below the minimum in any workweek, the employer must make up the difference
3. Do not retain tips -- the 2018 Consolidated Appropriations Act amended the FLSA to prohibit employers from keeping tips regardless of whether a tip credit is taken
4. Tip pooling rules -- valid tip pools can include servers, bartenders, bussers, and other customarily tipped employees; back-of-house employees can be included only if the employer does not take a tip credit

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Youth and Subminimum Wage Rates

The FLSA permits a youth minimum wage of $4.25 per hour for employees under 20 years old during their first 90 consecutive calendar days of employment with an employer. After 90 days (or when the employee turns 20, whichever comes first), the full minimum wage applies.

Other Subminimum Wage Provisions

• Full-time students: Employers with Department of Labor certificates can pay 85% of the minimum wage to full-time students in retail, service, agriculture, or universities (section 14(b))
• Student learners: Vocational education students can be paid 75% of the minimum with a DOL certificate (section 14(a))
• Workers with disabilities: Section 14(c) certificates allow subminimum wages for workers whose disabilities affect their productivity -- however, this program is being phased out in many states, and federal legislation (the Transformation to Competitive Integrated Employment Act) has been introduced to end it entirely

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Cities and Counties With Higher Minimum Wages

Dozens of cities and counties have enacted minimum wages above their state rates. Employers with employees working in these jurisdictions must comply with the local rate.

Notable City Rates (2026)

Compliance tip: If your business operates across multiple cities or states, you need a system to track which rate applies to each employee based on their work location -- not the company headquarters location.

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Scheduled Minimum Wage Increases

Several states have legislation mandating future increases. Employers should plan payroll budgets accordingly.

States with automatic CPI adjustments (marked with * in the state table) will see small annual increases without new legislation. For example, Washington state's minimum wage has increased every year since 2021 under Initiative 1433.

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Who Is Covered by Minimum Wage Laws?

The FLSA applies to employees of enterprises with annual gross volume of sales or business of at least $500,000, as well as employees of hospitals, schools, and government agencies regardless of revenue. Individual employees engaged in interstate commerce or the production of goods for interstate commerce are also covered.

Exempt Employees

The following are not entitled to the federal minimum wage:

• Executive, administrative, and professional employees earning at least $43,888/year salary (DOL 2024 rule; previously $35,568)
• Outside sales employees (no salary threshold)
• Computer employees earning at least $27.63/hour or $43,888/year salary
• Certain seasonal and recreational establishment employees (section 13(a)(3))
• Agricultural workers on small farms (fewer than 500 man-days of labor in any quarter of the preceding year)

Independent Contractors

Independent contractors (1099 workers) are not covered by the FLSA at all. However, misclassification of employees as independent contractors is a significant enforcement priority for the Department of Labor. The 2024 DOL final rule on independent contractor classification uses a six-factor economic reality test to determine worker status.

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Employer Compliance Checklist

1. Identify the applicable rate: Determine the highest minimum wage that applies -- federal, state, or local -- for each employee based on their work location
2. Post required notices: Federal law requires the FLSA minimum wage poster (WH-1088) in a conspicuous place. Most states have their own poster requirements
3. Track hours accurately: Non-exempt employees must have their working time recorded, including overtime (29 CFR 516)
4. Calculate tipped wages correctly: If taking a tip credit, ensure combined wages meet or exceed the applicable minimum
5. Review annually: States with CPI-indexed rates change every January 1 (some on July 1). Set a calendar reminder to update payroll
6. Audit multi-location compliance: For businesses operating in multiple jurisdictions, verify each location pays the correct local rate
7. Maintain records: FLSA requires payroll records to be retained for at least 3 years (29 CFR 516.5)
8. Train managers: Front-line managers who set schedules and approve timesheets must understand minimum wage and overtime rules

Penalties for Non-Compliance

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How Grove HR Helps With Minimum Wage Compliance

Managing minimum wage compliance across multiple states, cities, and employee types is challenging -- especially for growing businesses. Grove HR simplifies this by:

• Tracking employee work locations so the correct rate is always applied
• Flagging payroll discrepancies when calculated pay falls below the applicable minimum
• Storing compliance documentation including posters, acknowledgements, and rate change records
• Automating annual rate updates for CPI-indexed states

Stop guessing which rates apply. Start your free trial and let Grove HR handle the complexity.