US Minimum Wage By State: A Guide for Employers (2026)

The US minimum wage impacts hiring practices, payroll management, and compliance with labor laws. That is why you must understand how it works, especially if you are new to the market or expanding your operation to multiple states.

However, it can get overwhelming to keep tabs on the changes to the minimum wage. That’s where a solution like Deel comes in handy.

Deel’s all-in-one HR platform embeds compliance with federal and state minimums, automatically flags pay issues, and surfaces the correct local tax and labor forms. Ongoing monitoring, plus dedicated HRBP support for federal rules, ensures you never miss a wage or documentation requirement.

This guide provides a detailed overview of the US minimum wage, recent legislative changes, and the differences across states, helping you navigate the complexities of payroll regulations.

What is the federal US minimum wage?

As of 2026, the federal minimum wage in the US is $7.25 per hour. The minimum wage is the lowest amount that employers are legally required to pay their employees per hour of work. The federal minimum wage is designed to protect workers from unduly low pay and ensure a basic standard of living.

Interested in how minimum wage varies globally? Read our guide to minimum wage by country.

How often does the federal minimum wage rise?

The federal minimum wage has remained at $7.25 per hour since July 24, 2009. However, recent years have seen significant movements advocating for higher wages, such as the Fight for $15 campaign. This was a political movement advocating raising the national minimum wage to $15, in parity with other countries of comparable economic status.

The campaign has succeeded in numerous states, with local legislation being passed to raise the state minimum wage to at least $15 in:

• California

• Connecticut

• Delaware

• District of Columbia

• Illinois

• Maryland

• Massachusetts

• New Jersey

• New York

• Rhode Island

• Washington

In addition, some major cities, in recognition of the locally higher cost of living, have raised their municipal minimum wage to this new level. Cities that have taken this step so far include New York City, Seattle, and San Francisco.

These minimum wage movements reflect economic and political pressures to improve living standards for workers countrywide.

There are also state-specific regulations and requirements for overtime rates in the US.

US minimum wage by state

Minimum wage varies by state. Some states follow federal minimum wage guidelines, while other states have higher minimum wage requirements. Here are the minimum wage rates by state, effective Jan 1, 2026:

Minimum wage variations

The minimum wage can vary not only by state but also by industry and worker status. For example:

• Tipped workers: Federal law allows a lower minimum wage for tipped employees of $2.13 per hour, provided their tips bring their total earnings to at least $7.25 per hour. Some states require higher base pay for tipped workers.

• Youth minimum wage: The Fair Labor Standards Act (FLSA) permits employers to pay workers under 20 years old a minimum wage of $4.25 per hour during their first 90 consecutive calendar days of employment.

• Training wages: Some states allow lower wages for new employees undergoing training

• Disability provisions: Certain workers with disabilities may be paid less than the minimum wage under specific conditions outlined in the FLSA. The intention behind this provision is to incentivize employers to engage workers who might otherwise be deemed less capable or competitive.

What legislation established the federal minimum wage?

The US hasn’t always had a minimum wage. The first federal minimum wage was enacted in the National Industrial Recovery Act of 1933, but was later struck down as unconstitutional. Five years later, the FLSA successfully established it at $0.25 per hour (equivalent to around $5.57 today).

Impact of minimum wage on employees and employers

Minimum wage legislation across cities and states can significantly affect recruitment and retention in those regions.

In general, higher wages attract a wider pool of applicants, while lower wages limit the pool.

Here are some of the other considerations to consider when setting wages:

For employees

• Living standards: Higher wages can significantly improve an individual’s living conditions and reduce poverty.

• Mental health: Having fewer financial worries can lead to improved mental health outcomes, including reduced stress and anxiety.

• Economic stability: Increased earnings can lead to greater economic stability and spending power.

• Employment flexibility: A highly-paid worker may be more willing to work overtime, work extended hours, relocate for work, and otherwise be more flexible.

For employers

• Labor costs: Higher wages can increase operating costs, particularly for small businesses.

• Pricing strategies: Businesses may need to adjust their pricing to maintain profitability while complying with wage-and-hour laws.

• Productivity: A company can improve worker morale and productivity by adopting a fair and generous remuneration policy.

• Reputation: Companies with a reputation for paying well may be more competitive in terms of attracting the very best talent.

• Retention: Employees will be less likely to leave your company for a rival firm if you offer a competitive remuneration package.

Compliance and enforcement

Ensuring compliance with minimum wage laws is critical for avoiding penalties and legal issues. There are several best practices to follow, including:

• Staying informed: Regularly update knowledge of federal and state wage laws and payroll tax compliance.

• Using tools and resources: Leverage tools like Deel’s Compliance Hub to streamline compliance efforts.

• Knowing the competition: Stay competitive by researching what companies within your sector typically pay.

• Understanding penalties: Non-compliance can result in fines, back wages, and legal complications. FLSA fines can amount to $10,000 per employee per violation.

It has been widely reported that US companies that underpay their workers are not adequately or consistently fined. However, the reputational damage of becoming a national news story (as Chipotle did in 2020 for child labor violations) should give employers pause.

On the other end of the spectrum, Amazon received positive publicity when it raised its minimum wage to $15 in 2018, putting it ahead of retail sector rivals Walmart and Target.

How to adjust payroll when a state raises the minimum wage

When a state or locality raises its minimum wage, acting quickly protects both your business and your employees. Follow these steps before the first pay period that includes the effective date:

1. Confirm jurisdiction and effective date

Check your state’s Department of Labor website or the US DOL’s state-by-state minimum wage page. Many cities and counties set their own minimum wages that override state rates, so verify local requirements for each worksite.

Remote workers typically fall under the wage law where they perform the work, not where your headquarters is located.

2. Identify affected employees

Pull a report of employees whose current base pay falls below the new minimum wage threshold.

Include part-time and seasonal workers, remote employees, tipped employees, workers in training periods, and anyone paid by commission or piece rate.

Document which location applies to employees who work across multiple jurisdictions.

3. Update payroll master data

Update your payroll system before processing the next pay cycle.

Change the base pay rate for each affected employee or adjust your wage rules if your system supports automatic rate tables by location.

Use job codes or tags to group affected employees for easier auditing and future adjustments.

4. Run a dry run/test payroll

Run a test cycle to validate that net pay, overtime calculations, and tax withholding reflect the new rates correctly.

Confirm that tip credits, training wages, and youth exemptions calculate properly. Catching errors in a test run prevents costly back pay and penalties later.

5. Calculate retroactive pay (if required)

If you missed the effective date, calculate back pay for each affected employee. Determine hours worked between the effective date and correction, the wage difference, and whether overtime was undercalculated.

Process retroactive pay as a separate, clearly labeled off-cycle run and keep detailed records of your calculations.

6. Communicate and document

Notify affected employees of the change, including the effective date and the new wage.

Archive all documentation for at least three years, including government notices, affected employee lists, before-and-after pay rates, payroll reports, employee communications, and retroactive pay calculations. This proves compliance if audited.

The best approach: vigilance and intelligent compliance

Managing minimum wage compliance manually across multiple states is time-consuming and risky.

Deel Payroll - US automates rate tracking, employee pay updates, and audit trails. The platform automatically applies location-specific rules, handles mid-year adjustments and local overrides, and flags calculation errors before you finalize payroll.

For companies with multi-state teams, this eliminates manual work and reduces compliance risk.

Employers can leave state-by-state compliance to experts by using Deel PEO to handle HR, payroll, and compliance efficiently. Hear how US startup Strada uses Deel Payroll to save time and money:

To streamline your payroll processes and ensure compliance, consider booking a demo with Deel today.