The federal minimum wage is $7.25 an hour for covered nonexempt employees, as of October 2026. When a state's minimum wage is higher, the employee gets the higher of the two, which is why most US workers are owed more than $7.25.
The federal rate comes from the Fair Labor Standards Act and is enforced by the Department of Labor's Wage and Hour Division. State rates are a different story, so the useful question for an employer isn't what the federal rate is. It's which rate applies to the people you employ.
The federal rates at a glance
| Who | Federal minimum (as of October 2026) | Where it comes from |
|---|---|---|
| Covered nonexempt employees | $7.25 an hour | DOL minimum wage page |
| Tipped employees: minimum cash wage | $2.13 an hour | DOL tipped employees table |
| Tipped employees: maximum tip credit | $5.12 an hour | DOL tipped employees table |
| Employees under 20, first 90 consecutive calendar days | Not less than $4.25 an hour | DOL minimum wage page |
The youth rate comes with a condition: the DOL says it applies only as long as the young worker's employment doesn't displace other workers.
How the tipped minimum wage works
Under federal law, a tipped employee is someone who regularly gets more than $30 a month in tips. You can pay them a cash wage of $2.13 an hour and count up to $5.12 of their tips towards the $7.25. If their tips don't bring them up to $7.25 for the hours worked, you make up the difference.
Plenty of states don't allow that. The DOL's table groups states that require a higher cash wage than $2.13, and some, such as Hawaii, set their own conditions on any tip credit at all. If you run a cafe, salon or bar, read your state's row, not just the federal line.
Federal or state: which rate do you pay?
The DOL is clear: when an employee is covered by both state and federal minimum wage laws, they're entitled to the higher of the two. Here's what the DOL's state table shows for a sample of states, as of October 2026:
| State | Basic minimum rate per hour (DOL table) |
|---|---|
| District of Columbia | $18.40 |
| Washington | $17.13 |
| California | $16.90 |
| Connecticut | $16.94 |
| New Jersey | $15.92 |
| Florida | $14.00 |
| Texas | $7.25 |
| Pennsylvania | $7.25 |
| Alabama, Louisiana, Mississippi, South Carolina, Tennessee | No state minimum wage law, so the federal $7.25 applies to FLSA-covered employers |
| Georgia and Wyoming | $5.15, but FLSA-covered employers must pay the federal $7.25 |
That last row is the one that surprises people. Georgia and Wyoming have state rates below the federal minimum, but the DOL notes that employers subject to the FLSA must pay the federal rate anyway. The low state rate only matters for the small number of employers outside the FLSA.
Some state rates also come with extra overtime rules. California, for example, requires time and a half after eight hours in a workday, not only after 40 hours in a week. If you're new to US payroll, my explainer on the no tax on overtime deduction covers how overtime pay is treated at tax time.
Who isn't owed the minimum wage
The federal minimum wage applies to covered nonexempt employees. Some salaried white-collar employees are exempt from both minimum wage and overtime, but only if they meet the DOL's salary and duties tests. Job titles don't decide it. The DOL also points out that the FLSA doesn't give a way to collect promised wages or commissions above the legal minimum; some states have their own laws for those claims.
Minimum wage and equal pay
Paying the minimum isn't the only pay rule. The DOL's minimum wage page also flags the equal pay provisions, which ban pay differences based on sex between men and women in the same establishment doing jobs that need equal effort, skill and responsibility. Those are enforced by the Equal Employment Opportunity Commission rather than the Wage and Hour Division. So if you set a starting rate for a role, set it for the role, not the person. It's the cheapest way to stay clear of both sets of rules, and it makes your next hire quicker because the number is already decided.
States set higher rates, and our Florida minimum wage guide covers Florida.
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How to check you're compliant
- Find the state, and if relevant the city or county, where each employee works.
- Compare that rate with $7.25 and pay the higher one.
- If you take a tip credit, check your state allows it and what cash wage it requires.
- Check your state's overtime trigger, as some use a daily limit as well as the 40-hour week.
- Put a reminder in your diary: several states adjust their rate every year by a set formula (the DOL notes the District of Columbia's changes each 1 July).
The act behind the rate is explained in our FLSA guide.
My verdict
Treat $7.25 as the floor of the floor. Unless you only employ people in one of the states that sit at the federal level, it's almost never the number you'll pay. Set payroll by work location, recheck every state rate when the year turns over, and be extra careful with tip credits, because that's where well-meaning small employers end up owing back pay. If you're negotiating rates with your own staff, my guide on how employees ask for a pay rise shows the conversation from their side.
Frequently asked questions
What is the federal minimum wage in 2026?
The federal minimum wage for covered nonexempt employees is $7.25 an hour, as of October 2026.
What is the federal minimum wage for tipped employees?
Employers can pay a minimum cash wage of $2.13 an hour and take a tip credit of up to $5.12, as long as the employee's tips bring them to at least $7.25 an hour.
Do I pay the state or federal minimum wage?
The higher of the two. When an employee is covered by both state and federal minimum wage laws, they're entitled to the higher rate.
Is there a youth minimum wage in the US?
Yes. Employees under 20 can be paid not less than $4.25 an hour for their first 90 consecutive calendar days, as long as it doesn't displace other workers.
Which states use the federal minimum wage?
The DOL's table shows several states at $7.25, including Texas and Pennsylvania, and five states with no state minimum wage law at all, where FLSA-covered employers pay the federal rate.
Who enforces the federal minimum wage?
The Department of Labor's Wage and Hour Division administers and enforces the federal minimum wage law.
