Minimum Wage by State 2027: Rates and Effective Dates

The federal minimum wage stays at $7.25 an hour in 2027, but most states set a higher rate, and more than a dozen raise it on January 1, 2027. Washington leads the states at $17.73, Michigan jumps to $15.00, and California reaches $17.40. If you have even one employee, check the minimum wage by state table below and update payroll before your first pay run of the year.

Rates in this guide reflect announcements available as of early November 2026. A few states publish their inflation adjustment late in the year, so confirm with the state labor department before you set pay. This is general information, not legal advice.

Minimum wage by state 2027: January 1 increases

These states have confirmed or scheduled increases on January 1, 2027.

State	2026 rate	2027 rate	Notes
Washington	$17.13	$17.73	Inflation indexed; Seattle $22.14
Connecticut	$16.94	$17.48	Indexed to employment cost index
California	$16.90	$17.40	Many cities higher; sector rates for fast food and health care
Rhode Island	$16.00	$17.00	Legislated step
New Jersey	$15.92	$16.48	Most employers; separate seasonal, small employer and farm rates
Colorado	$15.16	$15.71	Denver and Boulder higher
Maine	$15.10	$15.70	Inflation indexed
Arizona	$15.15	$15.65 reported	Confirm with the Industrial Commission; Flagstaff higher
Nebraska	$15.00	$15.26	Set by LB 258 (2026)
Michigan	$13.73	$15.00	Largest percentage increase
Vermont	$14.42	Pending	Inflation adjustment due late 2026
Virginia	$12.77	$13.75	Signed April 2026
South Dakota	$11.85	$12.30	Inflation indexed
Minnesota	$11.41	$11.87	Minneapolis and Saint Paul higher
Ohio	$11.00	$11.40	Applies to larger employers; smaller ones follow the federal rate
Montana	$10.85	$11.20	Inflation indexed

Sources: state announcements compiled by payroll trackers, including Experian Employer Services' 2027 state and local minimum wage changes. For federal rules and state links, see the US Department of Labor's state minimum wage laws page.

States that change on other dates

State	Current rate	Next change
District of Columbia	$18.40 (from July 1, 2026)	July 1, 2027, amount not yet announced
Oregon	$15.55 standard; $16.80 Portland metro; $14.55 nonurban (from July 1, 2026)	July 1, 2027, inflation adjustment
Alaska	$14.00 (from July 1, 2026)	$15.00 on July 1, 2027
Florida	$15.00 (from September 30, 2026)	Inflation indexing from September 30, 2027

States with no scheduled January 2027 increase

• At $15.00 with no further step scheduled: Delaware, Illinois, Maryland, Massachusetts and Missouri.
• Hawaii: $16.00 since January 1, 2026; the next legislated step is in 2028.
• New York: $17.00 in New York City, Long Island and Westchester and $16.00 elsewhere. No January 2027 increase had been confirmed at the time of writing; check the New York State Department of Labor.
• Nevada and New Mexico: $12.00, with no January 2027 change expected.
• Federal $7.25 states: states without a higher minimum, including Texas, Pennsylvania, Georgia, North Carolina, Tennessee, Indiana and others, follow the federal rate.

Local minimum wages that override state rates

Over 50 cities and counties set their own minimum wage. Selected January 1, 2027 rates:

• Seattle, WA: $22.14
• West Hollywood, CA: $20.94 (non-hotel workers)
• Palo Alto and Santa Clara, CA: $19.25
• Flagstaff, AZ: $18.95
• San Diego, CA: $18.35
• Boulder, CO: $18.17
• Minneapolis, MN: $17.02

Pay the highest of the federal, state and local rate for where the employee physically works.

Tipped, youth and other special minimum wages

The headline rate is not the only number on the poster. Several special rates can apply to your staff.

Rule	Federal standard	What to check at state level
Tipped employees	Cash wage of at least $2.13 an hour, with tips making up the difference to $7.25	Many states require a higher cash wage; some, such as California, Washington, Oregon, Minnesota, Nevada and Alaska, allow no tip credit at all
Youth opportunity wage	$4.25 an hour for employees under 20 during their first 90 consecutive calendar days	Some states prohibit it or set their own training or youth rate
Overtime	1.5 times the regular rate after 40 hours in a workweek	Some states, including California, also require daily overtime
Exempt salary threshold	$684 a week after the 2024 rule was vacated	California, New York, Washington, Colorado and others set much higher thresholds

If you use a tip credit, you must still ensure each employee's cash wage plus tips reaches the full minimum for every workweek, and make up any shortfall. Track tips carefully in payroll, especially now that employees may claim the federal deduction for qualified tips.

How minimum wage interacts with exempt salaries

In several states, the exempt salary threshold is a multiple of the state minimum wage, so it rises automatically. California's threshold for exempt employees, for example, is twice the state minimum wage for full-time work, and Washington's is a multiple of its minimum wage that is stepping up each year. A salaried manager who was safely exempt in 2026 might fall below the 2027 threshold, which would make them non-exempt and entitled to overtime. Review every salaried role in high-wage states before January 1.

Worked example: budgeting a Michigan minimum wage increase

Illustrative: a Michigan cafe has three part-time staff at the minimum wage, each working 25 hours a week.

Item	Calculation	Annual amount
Wage increase per hour	$15.00 - $13.73	$1.27
Extra wages	$1.27 x 25 hours x 52 weeks x 3 staff	$4,953
Employer Social Security and Medicare	7.65% x $4,953	$379
Total added cost		$5,332

State unemployment and workers' compensation premiums based on payroll add a little more. Our guide to employer payroll taxes lists each layer. To cover the increase, the cafe would need roughly $103 a week in extra gross profit, through price changes, better scheduling or more catering orders invoiced at higher margins.

Checklist: updating payroll for 2027 minimum wage changes

1. List every work location, including remote employees' home cities.
2. Look up the highest applicable rate (federal, state, county, city) and its effective date.
3. Update pay rates in payroll software for the first pay period that includes January 1. If a pay period straddles the date, hours worked on or after January 1 must be paid at the new rate.
4. Check tipped and exempt employees. Tip credits, tipped cash wages and exempt salary thresholds often move with the minimum wage.
5. Replace labor law posters with the updated state versions.
6. Review overtime rates, which are 1.5 times the new regular rate.
7. Update pay stubs and timekeeping. Our timesheet template and pay stub template help with records.

If you are new to payroll, start with how to do payroll yourself, and if your schedule is changing, see biweekly vs semimonthly payroll.

Common minimum wage mistakes

• Missing a local ordinance because the business address is outside the city where staff work.
• Not paying for all hours, such as required training, opening and closing tasks, or short breaks under 20 minutes.
• Deductions that push pay below minimum, such as uniform costs or cash register shortages, which many states prohibit.
• Treating workers as contractors to avoid the minimum wage. See W-2 vs 1099 for the classification basics.
• Forgetting the effective date for states that change on July 1 or September 30.

What to do if you underpaid after a rate change

Mistakes happen, especially in the first pay run of January. If you discover that an employee was paid below the new minimum:

1. Calculate the shortfall for every affected hour, including overtime at 1.5 times the correct rate.
2. Pay it promptly in a correction check or the next payroll, with normal withholding.
3. Explain the correction on the pay stub so the employee can see the back pay.
4. Fix the rate in your payroll system and check other employees at the same location.
5. Keep records of the correction. Many state laws allow employees to claim unpaid wages plus damages, so fixing errors quickly limits exposure.

Remote employees in other states

Remote work makes minimum wage compliance trickier. The general rule is that the law of the place where the employee physically works applies. A Texas company with a remote customer service rep in Denver must pay at least Denver's local minimum, not the federal $7.25. Keep each remote employee's work address current in payroll, and ask employees to tell you before they relocate, since a move across a city line can change their rate overnight.

Wage compression: the hidden cost

When the minimum rises, employees just above it often expect raises too. If a shift lead earned $15.50 when the minimum was $13.73, a new $15.00 minimum leaves only a 50-cent gap for extra responsibility. Many employers adjust the whole pay scale to keep a meaningful difference between roles, which can double the cost of the headline increase. Plan raises as a structure, not employee by employee, and use a consistent salary increase percentage where you can.

What minimum wage changes mean for service pricing

If your business bills clients for labor, rising wages should flow into your rates. Contractors, cleaning companies, caregivers and event staffing firms typically review hourly billing rates each January. Give clients 30 days' notice of new rates, state them clearly on quotes, and show hours and rates on each invoice. For billing staff overtime to clients, see how to invoice for overtime, and when hiring for the first time, read hiring your first employee.

Bill clients accurately for 2027

When labor costs rise, accurate invoices protect your margin. List hours, rates and dates clearly so clients understand price changes. You can create itemized invoices with our free invoice generator: no sign-up, and every invoice downloads as a PDF.