US Minimum Wage By State: A Guide for Employers [2025]

Understanding the US minimum wage is crucial for employers, especially those new to the market or expanding their operations. The minimum wage impacts hiring practices, payroll management, and compliance with labor laws.

Deel’s all-in-one HR platform embeds compliance with the federal and state minimums, automatically flagging pay issues, and surfacing the correct local tax and labor forms. Ongoing monitoring plus dedicated HRBP support for federal rules means 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 2025, 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 our minimum wage varies globally? Read our guide to minimum wage by country.

US minimum wage by state

Minimum wage varies from state to state. Some states follow federal minimum wage guidelines, while other states have higher minimum wage requirements. Here are the minimum wage rates by state for 2025:

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 for the national minimum wage to be raised to $15, in parity with other countries of equivalent 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.

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 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 signed into law in the National Industrial Recovery Act of 1933, but later struck down as unconstitutional. Five years later, the Fair Labor Standards Act (FLSA) successfully established it at $0.25 per hour (equivalent to around $5.57 today).

Impact of minimum wage on employees and employers

The minimum wage legislation in different cities and states can significantly affect recruitment and retention within those regions.

In general, higher wages attract a wider pool of applicants, and lower wages limit the range of people who will apply for a position.

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 worker who is highly-paid may be more willing to undertake overtime, work extended hours, relocate for work, and otherwise exhibit more flexibility.

For employers

• Labor costs: Higher wages can increase operating costs, particularly for small businesses.
• Pricing strategies: Businesses may need to adjust pricing strategies to maintain profitability while complying with wage 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 tempted to leave your company for a rival firm if you are offering 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 wages for employees to $15 in 2018, putting it ahead of retail sector rivals Walmart and Target.

The best approach: vigilance and intelligent compliance

To effectively manage payroll and ensure legal compliance, it’s vital to stay informed about the US minimum wage and its variation across states. For more information on managing US payroll and compliance, check out our US Payroll Tax articles.

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

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