Minimum Wage FAQ: 25 Common Questions Answered

The federal minimum wage is $7.25 per hour, unchanged since 2009-07-24. It applies to most covered employers nationwide unless a state or city sets a higher rate, in which case employers must pay the higher rate.

Washington has the highest state minimum wage in 2026, at $17.33 per hour. Some cities within other states set local rates that are even higher than any statewide minimum. See the state comparison table for details.

20 states currently default to the $7.25/hr federal minimum wage rather than setting their own higher rate: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, Wyoming.

As of 2026, 30 states (plus Washington D.C. and many cities) set a minimum wage above the federal floor of $7.25/hr.

The federal tipped minimum wage is $2.13/hr in direct cash wages, with employers allowed to claim a tip credit of up to $5.12/hr as long as tips bring the employee's total earnings to at least $7.25/hr. Many states set a higher tipped cash wage or ban the tip credit entirely.

The employer must pay the shortfall directly for that workweek. The tip credit is a ceiling employers are allowed to claim, not a guarantee: if direct wages plus tips fall short of the full minimum wage, the employer is legally obligated to make up the difference.

7 states require tipped employees to be paid the full state minimum wage before tips, with no tip credit allowed: Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington.

To be classified as exempt from overtime under the FLSA "white-collar" rules, a salaried employee must earn at least $684/week ($35,568/year) federally, and also pass a duties test. 6 states set a higher threshold that overrides the federal minimum for employers there.

No. Meeting the minimum salary threshold is necessary but not sufficient: the employee's actual job duties must also fit one of the FLSA's recognized exempt categories (executive, administrative, or professional). Job title alone never determines exempt status.

The federal minimum wage was last raised on July 24, 2009, to $7.25/hr, the final step of a three-part increase passed by Congress in 2007. As of 2026, that is the longest period without a federal increase in the law's history.

22 states increased their minimum wage in 2026, most through scheduled multi-year phase-ins or annual cost-of-living adjustments passed in prior years, not new legislation enacted in 2026 itself.

Yes, in states that permit it. Many cities (including several in California, Washington, and New York) set local minimum wage rates higher than their state's rate. Some states preempt this and prohibit any local minimum wage ordinance, meaning the state rate applies uniformly regardless of city.

Employers must always pay the highest rate that applies to a given work location: federal, state, or local. If a city minimum wage exceeds the state minimum, and the state minimum exceeds the federal minimum, employees in that city are entitled to the city rate.

No. Minimum wage and overtime protections under the FLSA and state law apply only to employees, not independent contractors. Misclassifying a worker as an independent contractor when they are legally an employee is a separate, common wage-and-hour violation.

No. Proposals to raise the federal minimum wage to $15/hr have been introduced in Congress repeatedly but have not passed both chambers. Several individual states and cities have independently enacted their own $15/hr or higher minimums through state legislation or ballot initiatives.

Yes. Minimum wage requirements apply per hour worked, regardless of whether the employee works full-time or part-time. A part-time employee is entitled to the same hourly minimum wage as a full-time employee doing the same work in the same location.

Multiply the hourly rate by hours worked per week, then by 52 weeks. For a standard 40-hour week at the federal minimum wage, that's $7.25 × 40 × 52 = $15,080/year before taxes. Rates and full weekly/monthly/annual breakdowns for any state are available in the calculator.

No. Minimum wage is the legal floor set by federal, state, or local law. A living wage is an estimate of what a worker needs to earn to cover basic expenses in a specific area, and is often significantly higher than the applicable legal minimum wage, especially in high-cost cities.

Yes. Wages earned at minimum wage are subject to the same federal, state, and payroll taxes (Social Security and Medicare) as any other wage income. There is no minimum-wage-specific tax exemption, though lower earners may qualify for credits like the Earned Income Tax Credit.

Federal law permits a youth minimum wage of $4.25/hr for employees under 20 years old, but only during their first 90 consecutive calendar days of employment with a given employer. After that period, or once the employee turns 20, the full minimum wage applies. Some states restrict or prohibit this youth rate entirely.

Non-exempt employees must be paid at least 1.5 times their regular hourly rate for hours worked beyond 40 in a workweek. For tipped employees, this is calculated off the full minimum wage, not the reduced tipped cash wage, a common source of underpayment.

Document your hours and pay, then contact your state labor department or the US Department of Labor's Wage and Hour Division to file a complaint. Employees are legally protected from retaliation for raising a good-faith wage complaint, and back pay plus penalties are often available to workers who were underpaid.

Generally, the minimum wage of the state (and sometimes city) where the employee physically performs the work applies, not the location of the employer's headquarters. A remote employee working from a higher-minimum-wage state is generally entitled to that state's rate.

A growing number of states index their minimum wage to the Consumer Price Index (CPI), triggering automatic annual increases without new legislation each time. Other states use fixed multi-year phase-in schedules instead. Check each state's page for its specific adjustment mechanism.

There is no scheduled federal minimum wage increase as of 2026: any change requires a new act of Congress signed into law, and no such legislation has passed. Most recent wage growth for low-wage workers has come from state and local minimum wage increases rather than federal action.