Minimum Wage Increases by State: What Employers Need to Know

The first time a minimum wage increase caught me off guard, I had been underpaying two employees for six weeks. The state rate went up on January 1. I did not check. My payroll provider did not auto-update. Nobody told me.

I found out in mid-February when an employee asked why their paycheck looked the same as last year even though "the minimum wage went up." I owed both of them back pay, felt like an idiot, and immediately set a December calendar reminder that I have never missed since.

In 2026, 22 states raised their minimum wage. Nineteen of those increases took effect on January 1. Alaska and Oregon followed on July 1, along with the District of Columbia, and Florida takes its final step on September 30. More than 60 cities and counties also raised their local rates. If you have employees in any of these jurisdictions and you did not update payroll, you are underpaying right now.

This guide shows you every state that increased its minimum wage in 2026, when each change takes effect, and how much rates went up. It also gives you the step-by-step process to follow every time a rate changes where you have employees, so the next increase does not catch you the way my first one caught me.

Overview: The Current Round of Minimum Wage Increases

According to the National Employment Law Project (December 2025 report), 88 jurisdictions raised their minimum wage at some point in 2026: 22 states and 66 cities and counties. The federal minimum wage stays at $7.25 per hour, unchanged since July 24, 2009. Every state raise came from legislation, a voter-approved ballot measure, or an automatic inflation adjustment written into state law.

The increases run from modest inflation adjustments (such as Montana's $0.30, from $10.55 to $10.85) to large legislative steps (Hawaii's $2.00, from $14.00 to $16.00). Every inflation-indexed increase landed between $0.28 in Minnesota and $0.59 in Connecticut. For a full-time employee working 2,080 hours per year, even a $0.50 increase adds $1,040 to annual labor cost per affected employee.

States That Increased Minimum Wage on January 1

Nineteen states raised their minimum wage effective January 1, 2026. Check every state where you have employees against the table below, which shows the previous rate, the new rate, the dollar increase, and the mechanism that triggered the change.

Three patterns matter for employers. First, the inflation-indexed states (Arizona, California, Colorado, Connecticut, Maine, Minnesota, Montana, New Jersey, Ohio, South Dakota, Vermont, Washington) will move again on January 1, 2027, and the new rates are announced between late July and October.

Several of those 2027 rates are already out. New Jersey goes from $15.92 to $16.48 on January 1, 2027, a $0.56 step, with small and seasonal employers at $16.25, according to the state's minimum wage chart (MW-570, 9/26). California moves to $17.40, Colorado to $15.71, Minnesota to $11.87, and Montana to $11.20 on the same date.

The formulas behind those states differ more than the shared label suggests. Most track a consumer price index (CPI), Connecticut tracks the federal employment cost index under Public Act 19-4, and Minnesota tracks the implicit price deflator for personal consumption expenditures with the annual increase capped at five percent under Minnesota Statutes 177.24.

Second, states on legislated schedules publish their rates years ahead: Michigan reaches $15.00 and Rhode Island reaches $17.00 on January 1, 2027 under Rhode Island General Laws Section 28-12-3, and New York switches to annual CPI-W indexing (the CPI for urban wage earners and clerical workers) for the Northeast region that same year.

Third, do not assume a voter-approved rate is locked in. Missouri voters passed Proposition A with annual inflation adjustments attached; House Bill 567, signed in July 2025, stripped those adjustments out and repealed the measure's paid sick leave mandate, leaving the $15.00 rate with no escalator behind it.

Nebraska went the same way: Initiative 433 tied the rate to the Midwest CPI after 2026, and Legislative Bill 258, signed in February 2026, replaced that formula with a flat 1.75 percent annual increase. Ballot measures are harder to change than ordinary statutes, not impossible.

Virginia sits in both the indexed and the legislated camps. Its January increase came from the standard formula: the Commissioner of Labor and Industry added the 2.9 percent change in the CPI-U (the CPI for all urban consumers) to the 2025 rate, producing $12.41 plus $0.36, or $12.77.

A 2026 amendment to Virginia's law (Acts of Assembly chapters 350 and 351) then wrote fixed steps into the statute: $13.75 for 2027 and $15.00 for 2028, with the annual CPI calculation resuming by October 1, 2028 for a 2029 effective date. Virginia employers should budget from the statute, not the formula, for the next two years.

Michigan deserves special attention because its rate schedule changed course twice. In Mothering Justice v. Attorney General, decided July 31, 2024, the Michigan Supreme Court held that the legislature could not adopt a 2018 citizen-initiated wage law and then amend it in the same session. The ruling reinstated the initiative's wage increases on a delayed, court-set timeline starting February 21, 2025.

The Michigan legislature answered with Senate Bill 8, signed February 21, 2025: it kept the $12.48 rate that took effect that day, moved the annual increase to January 1, and set $13.73 for 2026 and $15.00 for 2027, with inflation adjustments starting in 2028. Employers in Michigan working from either the pre-ruling schedule or the court schedule are using the wrong number.

Mid-Year Increases: July 1 and September 30

Three states and the District of Columbia move their rates in the middle of the calendar year instead of on January 1. Alaska, Oregon, and DC changed on July 1; Florida changes on September 30. For employers with people in these jurisdictions, that is a deadline outside the usual January routine, and exactly the kind that gets missed.

Florida's September 30 increase is the one still ahead on the calendar, and it is the last scheduled step. Voters wrote the ladder into the state constitution in 2020: $10.00 on September 30, 2021, then $1.00 more every September 30 until the rate reaches $15.00 in 2026. Employers in Florida pay $15.00 for every hour worked on or after September 30, not from the start of the next pay period.

After the ladder ends, Florida calculates a CPI-W adjustment on September 30 of 2027 and every September 30 after it, but the constitution says each adjusted rate is published and takes effect on the following January 1. September 30, 2026 is therefore the last fall rate change in Florida; from 2028 the state joins the January 1 group.

Alaska's July 1 increase is one piece of Ballot Measure 1, approved by voters in November 2024. The same measure created mandatory paid sick leave, which took effect on July 1, 2025, a year before this wage step. Most Alaska employers already carry that obligation, so only the wage number changed on July 1, 2026. The wage ladder continues to $15.00 on July 1, 2027, after which the rate adjusts for inflation.

Oregon is the structural outlier. Its three-tier system means employers track which rate applies to each employee based on work location, not on where the company is headquartered.

Oregon's Portland metro rate covers work inside the urban growth boundary, the standard rate covers most of the state, and the nonurban rate covers 18 designated counties. All three adjust on July 1 by the same inflation figure, which came to $0.50 across all three tiers on July 1, 2026.

The District of Columbia follows the same July 1 rhythm. The DC Department of Employment Services raised the rate from $17.95 to $18.40 per hour on July 1, 2026, with the base wage for tipped employees rising to $10.30 and the employer still owing the difference whenever tips fall short of $18.40. DC remains the highest broad minimum wage floor of any state-level jurisdiction in the country.

States With No Increase Scheduled

Twenty-eight states did not increase their minimum wage in 2026. They fall into four categories, and the difference between the first two matters more than it looks. Much of the table turns on the Fair Labor Standards Act (FLSA), the federal minimum wage law.

For employers in the 20 states where the effective floor is the federal $7.25, the number will not move unless Congress acts or the state enacts its own law, and neither is on the calendar.

The Georgia and Wyoming line is a trap for anyone reading a state statute in isolation. Both states publish a $5.15 rate, but any employer covered by the FLSA pays $7.25, whatever the state statute says. FLSA coverage does not depend on headcount: it reaches every enterprise with at least $500,000 in annual sales and any employee individually engaged in interstate commerce.

For employers in the eight states above federal without indexing (Arkansas, Delaware, Illinois, Maryland, Massachusetts, Nevada, New Mexico, West Virginia), the rate is stable but one bill away from changing.

Will the Federal Minimum Wage Increase?

No federal minimum wage increase is scheduled. The rate has been $7.25 per hour since July 24, 2009, the longest stretch without an increase since the federal minimum wage was created in 1938. Every increase employers need to track right now comes from states, cities, and counties, not from Congress.

The 2009 change was the last federal minimum wage increase: the final step of the Fair Minimum Wage Act of 2007, which raised the rate from $5.15 to $5.85 in 2007, $6.55 in 2008, and $7.25 in 2009, according to the official history of the federal minimum wage published by the Department of Labor (DOL). Our complete minimum wage guide covers the full history since 1938.

The Raise the Wage Act

The Raise the Wage Act is the recurring congressional proposal to lift the federal floor. The 2025 version, introduced on April 8, 2025, would raise the federal minimum wage to $17.00 per hour by 2030 and phase out the separate subminimum wage for tipped workers, according to the announcement from Representative Bobby Scott, the ranking member of the House Education and Workforce Committee.

Both chambers referred the bill to committee the day it was introduced, and neither has taken it up since. Earlier versions died the same way in prior sessions.

The $15 Minimum Wage Is Already Here in Much of the Country

While the federal bill sits in committee, the $15.00 minimum wage has already arrived across much of the map. Seventeen states set their standard rate at or above $15.00: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Missouri, Nebraska, New Jersey, New York, Oregon, Rhode Island, and Washington. Florida becomes the eighteenth on September 30. Oregon carries an asterisk worth knowing: its $15.55 standard rate covers most of the state, but its 18 nonurban counties sit at $14.55.

Planning takeaway for employers: do not build wage budgets around the federal rate or wait on a federal raise. The action is in state inflation formulas, step schedules, ballot measures, and city ordinances. Washington ($17.13) and the District of Columbia ($18.40) already require more than the $17.00 the federal bill targets for 2030, and New York City reached $17.00 on January 1, 2026.

How Minimum Wage Increases Work: Three Mechanisms

Three mechanisms produce every state increase, and each one creates a different planning job. Indexed rates change every year, with no warning beyond an announcement a few months ahead. Legislated steps are predictable years in advance. Voter-approved measures are harder to unwind than ordinary statutes, but two states have now proved they are not permanent. Knowing which mechanism you are under tells you how far ahead you can budget.

The trend runs toward automatic indexing. Fourteen states and the District of Columbia set their 2026 rate by formula rather than by a vote, and the group keeps growing as step schedules finish: New York starts annual adjustments in 2027, Florida runs its first calculation in September 2027 for a January 2028 rate, Michigan indexes from 2028, Virginia from 2029, and Alaska after its final step in 2027.

Once a state hits its target rate, it now usually switches to indexing instead of freezing the number. Treat the minimum wage as a variable cost that reprices every year, not a fixed line in the budget.

Two states run the other way. Missouri removed the inflation escalator voters attached to Proposition A, and Nebraska swapped its escalator for a flat 1.75 percent. The legislature, not the ballot measure, now sets the terms in both: Nebraska's wage still rises every year, while Missouri's has no automatic increase behind it. If you operate in a state where voters set the rate, read the statute as amended before you model the next three years.

City and County Increases

On top of the 22 state-level increases, 66 cities and counties raised local rates in 2026. The local increases cluster in California (more than 40 cities and counties), Washington (8 jurisdictions), Colorado (Denver, Boulder, Boulder County, Edgewater), Minnesota (Minneapolis, St. Paul), and Illinois (Chicago, Cook County). The highest local rates in the country are in Washington, where seven of the eight local ordinances set a top rate above $20.00 per hour.

Employers with locations in several cities inside one state face the worst of this. A California employer with employees in San Francisco ($19.61), San Jose ($18.45), and Sacramento (the state rate, $16.90) tracks three different numbers, and San Francisco's moves on a different date from the other two.

The simplest compliance strategy is to pay everyone at least the highest rate across your locations. It costs slightly more and removes the risk of applying the wrong rate when someone picks up a shift at another site.

Puerto Rico, Industry Rates, and Other Special Cases

Minimum wage increases do not stop at the 50 states. Puerto Rico runs its own minimum wage law, and several states now set higher floors for specific industries that move on their own schedules. If any of these touch your workforce, they belong on the same compliance calendar as your state rate.

Puerto Rico Minimum Wage

Puerto Rico's minimum wage is $10.50 per hour, in effect since July 1, 2024 under Act 47-2021, the Puerto Rico Minimum Wage Act. The law created a Minimum Wage Review Commission and requires it to approve a mandatory decree at least once every two years. The Commission can raise the rate through those decrees, so the number moves without new legislation.

Employers in Puerto Rico pay the higher of the federal or Puerto Rico rate, exactly as in the states, and the FLSA still applies. Watch for Commission decrees the way employers in inflation-indexed states watch for the yearly rate announcement: the next increase arrives by administrative action, not by a bill you would hear about in the news.

Industry-Specific Increases: The $25 Minimum Wage

The $25 minimum wage already exists in one industry. California's Senate Bill 525 phases every covered health care facility toward a $25.00 per hour floor, with the largest systems (10,000 or more full-time equivalent employees) reaching that level in mid-2026 and other facility types following on later schedules (California Legislative Information). After the $25.00 step, the rate adjusts annually by the lesser of 3.5 percent or the change in CPI-W.

California also runs a separate, higher floor for large fast food chains, covered in our fast food minimum wage guide. The employer takeaway: when an industry law covers you, its rate overrides the general state rate whenever it is higher, and its effective dates rarely fall on January 1. Put them on the calendar separately.

Employer Action Checklist When Minimum Wage Increases

Every time a minimum wage rate changes for any jurisdiction where you have employees, the following seven steps apply. This is not a one-time process. If you operate in an inflation-indexed state, you will run this list every year: in January for most of them, in July if you are in Oregon or DC.

Updating Payroll: The Details That Matter

The payroll update is the most critical step because getting it wrong means every paycheck from the effective date forward is wrong. Three specific scenarios require attention beyond the simple rate change.

Retroactive Adjustments

If you discover that you missed a rate change after the effective date, you must pay the difference retroactively for all hours worked at the old rate since the new rate took effect. Calculate the total hours worked by each affected employee from the effective date to the current date, multiply by the rate difference, and include the back pay in the next paycheck. Document the calculation and keep it with your payroll records.

Overtime Recalculation

When the base hourly rate changes, the overtime rate (1.5x the regular rate) changes with it. An employee who earned $14.00/hour with overtime at $21.00/hour now earns $15.00/hour with overtime at $22.50/hour.

Make sure your payroll system recalculates overtime based on the new base rate, not the old one. This matters most in the first pay period that spans the effective date, where some hours may be at the old rate and some at the new rate.

Salaried Non-Exempt Employees

If you have non-exempt employees paid on a salary basis, verify that their effective hourly rate (salary divided by hours worked) still meets or exceeds the new minimum wage. A salaried non-exempt employee earning $600/week who works 45 hours has an effective rate of $13.33/hour.

If the minimum wage rises to $14.00, that employee's straight-time pay for those 45 hours has to reach $630. Do not stop there: the five hours over 40 also need the half-time overtime premium on top, another $35 at the new rate, so the compliant weekly total is $665.

Updating Posters

Every time the minimum wage changes, the workplace poster must be updated. The federal FLSA poster is available for free from the Department of Labor. State posters are available from your state labor department website. Employers do not need to purchase posters from commercial vendors, though commercial poster services offer the convenience of automatic updates.

For a fully remote workforce, an electronic posting can satisfy the requirement, but the conditions are narrower than most owners assume. Under Field Assistance Bulletin 2020-7, the Department of Labor accepts an electronic FLSA posting only when every employee works remotely, every employee customarily receives company information electronically, and every employee can reach the posting at any time without asking permission.

If part of your team reports to a site, that site still needs a physical poster, and an electronic copy is the practical way to reach your remote employees as well.

Impact on New Hires and Onboarding

Minimum wage increases affect three parts of the onboarding process that employers commonly overlook.

Offer Letters Drafted Before the Effective Date

If you draft an offer letter in December for an employee starting in January, the rate in the letter must reflect the January rate, not the December rate. This is a common onboarding error.

The fix is simple: do not include a specific hourly rate in offer letters until you have verified the rate that will be in effect on the employee's start date. Alternatively, include language stating that the rate is subject to the minimum wage in effect on the start date.

Wage Notices at Hire

Several states require employers to provide written wage notices at hire that include the employee's rate of pay, among them California under Labor Code section 2810.5 and New York under Labor Law section 195. These notices must reflect the current minimum wage, not a previous rate. If your onboarding document templates include a fixed rate, update them before the effective date of any rate change.

Training and Orientation Time

All onboarding time, including orientation, training, and required reading, must be compensated at or above the new minimum wage from the effective date forward. If an employee starts on January 2 and the minimum wage increased on January 1, every hour of their orientation is compensated at the new rate. There is no grace period or transition allowance for onboarding activities.

Annual Compliance Calendar

Minimum wage compliance runs on an annual cycle, not a one-time fix. The calendar below shows when to act through the year so you stay ahead of rate changes.

The most important date on this calendar is mid-December. By that point, every state with a January 1 increase has announced its new rate. Employers who check rates in mid-December and update payroll before December 31 will never be caught underpaying on January 1.

Common Mistakes Employers Make During Rate Changes

Here are eight mistakes to watch for when a rate changes, why each one happens, and how to avoid it.

The single most expensive mistake on this list is the first one: not updating payroll. Every pay period at the old rate is a violation, and the FLSA makes an employer liable for the unpaid wages plus an additional equal amount as liquidated damages, which doubles the bill.

At a $0.45/hour shortfall for one employee working 40 hours a week, six weeks of delay costs $108 in back pay plus $108 in liquidated damages, or $216. For 10 employees, that is $2,160 before attorney fees or state penalties. The mid-December and June checks on the calendar above are cheap insurance against that bill.

Frequently Asked Questions