Michigan Minimum Wage: Rates, Tip Credit, and Increases

A Michigan restaurant owner wrote to me after one of her servers filed a wage complaint. She had entered a tipped cash wage into her payroll software when she opened, checked the box that said it was correct, and never looked at it again. Michigan had moved that number twice in the meantime. The back pay was small. The investigation and the liquidated damages were not, and every dollar of it was avoidable.

That is the real problem with a state minimum wage. The number itself is easy. Keeping it current is what costs employers money, because Michigan now changes its wage floor on January 1 of every year and changes the tipped percentage on the same day.

This page covers one jurisdiction and one subject. Every figure below comes from the Michigan Department of Labor and Economic Opportunity or from the enacted statute, and each one is attributed. For the wider picture, sick leave, discrimination, local income tax withholding, termination, read the Michigan compliance guide instead.

The Current Michigan Rate

Michigan’s minimum wage is $13.73 per hour, and it has been since January 1, 2026. The previous rate was $12.48, which took effect on February 21, 2025. Both figures come from the Improved Workforce Opportunity Wage Act, Public Act 337 of 2018, as amended by Public Act 1 of 2025.

The act reaches employers with two or more employees who are 16 years of age or older, which takes in essentially every small business operating in the state. Coverage does not scale with headcount above that threshold. A three person bakery and a three hundred person distributor owe the same hourly floor.

The department publishes the rate on its Michigan minimum wage rate page. It set out the current figures in an announcement dated December 8, 2025. Two companion rates moved with the standard wage on the same date, and one did not.

The Next Scheduled Increase

The next increase is January 1, 2027, when the rate becomes $15.00 per hour. That is a $1.27 step, the largest one left in the schedule, and it is written into the statute rather than left to an agency. Nothing has to happen for it to take effect.

The schedule and the tipped percentages both come from Public Act 1 of 2025, signed February 21, 2025. That law rewrote the wage schedule after the Michigan Supreme Court, in Mothering Justice v. Attorney General on July 31, 2024, revived the original initiated act. The history matters in one way for an employer: any Michigan rate table saved before February 2025 is wrong.

From January 1, 2028 the dollar figure stops being fixed in law. The state treasurer multiplies the otherwise applicable rate by the twelve month percentage increase in the consumer price index for the Midwest region and publishes the adjusted rate by November 1 of the year it is calculated. So the November before each increase is when the exact number becomes knowable.

The department has not yet published the cash figures that pair with the 2027 rate. The statutory percentages are fixed, so 42 percent of $15.00 and 85 percent of $15.00 are straightforward arithmetic, but the official cent by cent figures come from the Wage and Hour Division in its December release. Use those, not your own rounding, when you reprogram payroll.

Tipped Employees and the Tip Credit

Michigan allows a tip credit. The cash wage for a tipped employee is $5.49 per hour, which is 40 percent of the $13.73 minimum, and the maximum tip credit is the remaining $8.24 per hour. Unlike the federal structure, which fixes the tipped cash wage at a dollar amount, Michigan sets it as a percentage that moves every January.

Two conditions attach. The employee has to be in a position that customarily and regularly receives gratuities from a guest, patron or customer for services rendered to that person. And if the cash wage plus actual tips does not reach $13.73 for the hours worked, you make up the difference in that pay period. The tip credit is a permission to count tips toward the floor, not a permission to fall below it.

The percentage rises two points a year from 2027 through 2031, so a tipped payroll setup needs revisiting every January even in a year when the base rate barely moves. Our broader walkthrough of tipped employee minimum wage covers the federal side and the shortfall math in more detail.

Tip pooling is a separate question that Michigan does not regulate through the wage act, and the federal rules govern who may participate. See the guide to tip pooling before you build a house policy.

City and County Rates in Michigan

No Michigan city or county has its own minimum wage, and none can adopt one. The Local Government Labor Regulatory Limitation Act, Public Act 105 of 2015, prohibits a local government from requiring an employer to pay a wage higher than the state rate. Michigan is a single rate state, and that is the entire local picture.

What does vary between Michigan cities is income tax withholding. Twenty four cities levy a local income tax and require separate employer registration where employees live or work. That changes what you withhold from a paycheck, never what you owe per hour. The state compliance guide lists the cities and the rates.

Industry Carve-Outs and Exemptions

Michigan has no industry specific minimum wage. There is no fast food wage council, no separate healthcare floor, no hospitality rate and no large employer rate. A quick service restaurant, a home care agency and a machine shop all owe $13.73. If you have moved here from a state that runs sectoral wage boards, that is the difference worth internalizing.

The exceptions that do exist are about who the act covers rather than what industry they work in. Three matter for a small employer.

Fast food is the carve-out employers ask about most, usually because of coverage from other states. Michigan has nothing equivalent. Our explainer on the fast food minimum wage covers the states that do run one.

Youth Rate and Training Wage

Michigan has both. Employees under 18 may be paid 85 percent of the minimum wage, which is $11.67 per hour at the current rate and rose from $10.60 on January 1, 2026. Separately, a newly hired employee under the age of 20 may be paid a training wage of $4.25 per hour during their first 90 calendar days of employment. The statute frames that band as employees 16 through 19 years old.

The training wage does not track the minimum wage. It has sat at $4.25 through several increases and did not move in the most recent one. Overtime for an employee on the training wage is time and a half of $4.25, which is $6.38 per hour.

Two practical limits. The 90 days are calendar days from hire, not days worked, so the clock runs through slow months and expires on schedule. And you cannot use the training wage to displace an existing employee, cut their hours, or replace them with a cheaper new hire. Hour and permit rules for minors sit in a separate statute, the Youth Employment Standards Act, and are covered in the Michigan hiring walkthrough.

The Poster Requirement

Section 7 of the Improved Workforce Opportunity Wage Act requires every covered employer to keep a minimum wage notice posted in a conspicuous place at the workplace. The Wage and Hour Division publishes form WHD 9904 for this purpose, and an employer who posts it is treated as meeting the requirement.

The poster is free. Download and print it from the department posting requirements page, or call the division and ask for a copy to be mailed. What trips employers is not hanging it. It is replacing it, because the department reissues the poster each time the rate changes, and that is now every January.

Michigan requires several other workplace postings alongside this one, including sick leave, safety, discrimination and unemployment notices, and one of them has to be posted in Spanish as well as English. The Michigan compliance guide lists the full set.

How Michigan Relates to the Federal Rate

The federal minimum wage is $7.25 per hour and has not moved since July 2009. Michigan’s $13.73 sits $6.48 above it, so the state rate is what you pay. Section 10 of the state act reaches the same result from the other direction: the act yields to the federal wage provisions only where those provisions would produce a lower wage than Michigan law, which they never currently do.

That relationship is stable for the foreseeable future, because Michigan is scheduled to reach $15.00 while the federal floor stays put. If you operate in more than one state, the federal baseline and the state by state picture are covered in the federal minimum wage guide, and the calendar of changes elsewhere sits in the roundup of scheduled minimum wage increases.

What to Do When the Rate Rises

Three things have to happen before the first pay period that touches the new rate: recalculate, notify, repost. Every January in Michigan, without exception, until you no longer employ anyone here.

Overtime mechanics beyond the rate change itself are out of scope here. The general treatment lives in the guide to overtime pay, and record retention in the piece on payroll records.

One more reason to be careful about the arithmetic: an employee affected by a violation may bring a civil action for the difference between what was paid and what was owed, plus an equal additional amount as liquidated damages, together with costs and reasonable attorney fees. A rate that is eleven cents low across a year of shifts stops being a rounding error very quickly.

Frequently Asked Questions