- Vermont wage rates in one table
- Who counts as a tipped employee in Vermont
- The five things you must tell tipped staff first
- How the yearly Vermont increase is worked out
- Who the Vermont law covers
- Paydays and meal breaks
- Vermont against its neighbours
- Common Vermont payroll mistakes
- My verdict
- Frequently asked questions
The minimum wage in Vermont is $14.42 an hour as of October 2026, up from $14.01 on January 1, 2026. Tipped staff in hotels, motels, tourist places and restaurants can be paid a basic rate of $7.21, but only if tips bring them up to the full $14.42 for every hour worked.
Vermont's Department of Labor adjusts both rates every January under 21 V.S.A. section 384. This guide uses the department's 2026 announcement, its minimum wage poster and its guidance on tipped and service employees, plus the U.S. Department of Labor's state tables, all read in October 2026.
Vermont wage rates in one table
| Rate | From January 1, 2024 | From January 1, 2025 | From January 1, 2026 |
|---|---|---|---|
| Minimum wage | $13.67 | $14.01 | $14.42 |
| Basic wage rate for tipped staff | $6.84 | $7.01 | $7.21 |
| Maximum tip credit | $6.83 | $7.00 | $7.21 |
The 2026 rise was $0.41 an hour. The basic tipped rate equals 50% of the full minimum wage, which is why it moves every year with the main rate.
Who counts as a tipped employee in Vermont
This is the detail most out-of-state owners miss. Vermont's definition is narrow. A service or tipped employee is someone working in a hotel, motel, tourist place or restaurant who customarily and regularly receives more than $120.00 a month in tips for direct and personal customer service. A hair stylist, a delivery driver for a shop or a bartender at a private event company may get tips, but if the business isn't one of those four types, the lower basic rate doesn't apply.
And even inside a restaurant, an employee who doesn't regularly get more than $120.00 a month in tips must be paid the full minimum wage. So a back-of-house cook who gets the odd share of tips is on $14.42, not $7.21.
The five things you must tell tipped staff first
The department's guidance says an employer can't use a tip credit until the employee has been told, in advance:
- The cash wage you're paying them, which can't be below the basic wage rate.
- The amount you're claiming as a tip credit.
- That the tip credit can't be more than the tips they receive.
- That they keep all their tips, except under a valid tip pool limited to staff who customarily receive tips.
- That the tip credit won't apply to them unless they've been told about these rules.
If tips in a workweek don't bring someone up to $14.42 for every hour, you make up the difference. My guide to tip pooling explains how shared pools work and who can be in one.
How the yearly Vermont increase is worked out
Vermont doesn't wait for lawmakers to pass a new number each year. Under 21 V.S.A. section 384, the rate rises each January by the change in the Consumer Price Index or 5%, whichever is smaller. The department's tipped guidance confirms the basic wage rate rises by the same percentage. The state rate is also replaced by the federal rate automatically if the federal figure is ever higher, which the U.S. Department of Labor's state table notes.
The department announces the new figures in the autumn before they take effect. If you run payroll, put a reminder in your calendar to check its press releases late in the year so your January pay run starts on the right number.
Who the Vermont law covers
The federal state table says Vermont's minimum wage applies to employers of two or more employees, and it requires premium pay after 40 hours a week. A sole owner with one employee may still be covered by the federal Fair Labor Standards Act, so check the federal rules before assuming you're outside both. The federal minimum wage guide covers how federal coverage works.
Paydays and meal breaks
- Paydays: the federal payday table notes that Vermont employers may move to bi-weekly or semi-monthly paydays with written notice to staff.
- Meal breaks: Vermont doesn't set a fixed break length. Under 21 V.S.A. section 304, employees must be given reasonable opportunities during work periods to eat and use toilet facilities.
- Overtime: time and a half after 40 hours in a week, per the federal state table.
Vermont against its neighbours
| State | Basic minimum wage (as of October 2026) |
|---|---|
| Vermont | $14.42 |
| New Hampshire | $7.25 (federal rate) |
| Massachusetts | $15.00 |
| New York (outside New York City and its suburbs) | $16.00 |
A business with staff on both sides of the Connecticut River pays very different floors. New Hampshire follows the federal $7.25, so a worker crossing into Vermont for a shift is owed nearly double. See my Massachusetts minimum wage page if you also hire there.
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Common Vermont payroll mistakes
- Paying the $7.21 basic rate to staff outside hotels, motels, tourist places and restaurants.
- Using the tipped rate for someone who doesn't regularly earn more than $120.00 a month in tips.
- Taking a tip credit without giving the five pieces of information first.
- Forgetting the January rise and running the first pay period on last year's rate.
- Switching to bi-weekly pay without written notice.
A quick self-check each January keeps you clear: confirm the new rate on the department's poster, update every hourly rate below it, and reissue tip credit notices to tipped staff with the new figures.
My verdict
The Vermont answer is simple once you know it moves every January: $14.42 an hour as of October 2026. The trap is the tipped rate. It's tied to four business types and a $120.00 monthly tip threshold, and it comes with a notice duty. If you're not sure someone qualifies, pay the full rate. It's cheaper than a back-pay claim.
Delaware also sits well above the federal rate but allows a very low tipped cash wage, and Delaware's minimum wage page works through an example.
Frequently asked questions
What is the minimum wage in Vermont right now?
As of October 2026 it's $14.42 an hour. It rose from $14.01 on January 1, 2026.
What is the tipped minimum wage in Vermont?
The basic wage rate for service or tipped employees is $7.21 an hour as of October 2026, which is 50% of the full rate. Tips must bring the worker up to $14.42 an hour, or the employer pays the difference.
Who is a tipped employee in Vermont?
An employee of a hotel, motel, tourist place or restaurant who customarily and regularly receives more than $120.00 a month in tips for direct and personal customer service.
How often does Vermont raise its minimum wage?
Every January 1. The rise follows the Consumer Price Index or 5%, whichever is smaller, under 21 V.S.A. section 384.
Does Vermont require meal breaks?
Vermont sets no fixed break length, but employers must give reasonable opportunities during work periods to eat and use toilet facilities.
