Vermont Minimum Wage: Rates, Tipped Wage, Dates

The first January I ran payroll in a state that indexes its minimum wage, I found out about the increase from an employee instead of from my own calendar. She had done her own math before I did mine, and her first check of the year was short. That conversation cost me more goodwill than the raise itself cost in payroll.

Vermont is one of those states. The rate moves every January 1 whether or not anyone reminds you, and it is tied to an index rather than to a legislative vote. The tipped rate moves with it automatically, because the statute pins it to exactly half the full wage.

This page gives you what you need to get that January right: the current rate and where it comes from, the basic tipped wage, who sits outside the state rate, the poster rule and a checklist for when the rate rises. It stays narrow on purpose, covering the minimum wage and the rules that hang directly off it.

What Vermont Employers Must Pay Per Hour

The Vermont minimum wage is $14.42 per hour, effective January 1, 2026. The Department of Labor announced the figure in its October 6, 2025 press release, a 41 cent increase over the $14.01 rate that ran through 2025.

One rate covers the entire state. There is no small employer rate, no regional rate and no industry rate sitting underneath it. Under the definition of employer in 21 V.S.A. section 383, the state wage and hour law reaches any employer with two or more employees (V.S.A. means Vermont Statutes Annotated). The Wage and Hour Unit in Burlington enforces it.

Every figure in that table comes from the department announcement issued for that year. The current rate and tipped wage also appear on the department's Worker Rights and Protections page, which is the fastest place to confirm the rate in January without digging through press releases.

The 2026 step worked out to roughly 2.9 percent, comfortably under the five percent cap the statute sets. Vermont increases have run between 34 and 63 cents a year since 2023, so a 40 cent budget line per hourly employee is a reasonable planning assumption until the real number is published.

When the Rate Changes Next

The next increase lands on January 1, 2027, and the amount is not published yet. Vermont indexes the rate rather than legislating each step, so the figure is arithmetic on a published index, not a political decision that might or might not happen.

The mechanics live in 21 V.S.A. section 384, and they are worth knowing because they tell you when to look and roughly how big the step can be. The index the statute uses is the Consumer Price Index for All Urban Consumers, or CPI-U, which the Bureau of Labor Statistics publishes.

No step increase, ballot measure or phase-in schedule sits on top of that. Vermont finished its scheduled climb to $12.55 in 2022 and has been on pure indexing since.

Tipped Employees and the Basic Tipped Wage

Vermont sets the basic tipped wage at $7.21 per hour as of January 1, 2026. Many states express the tipped rate as a dollar tip credit, meaning the amount of tips an employer may count toward the minimum wage.

Vermont's statute takes a different route. It fixes the basic wage at one half of the full minimum wage, so the credit and the cash wage both work out to $7.21 and both move automatically every January.

The employee still has to reach $14.42 for every hour worked. The department states the make-up rule plainly: where the employee does not receive enough in tips during a workweek to equal the standard minimum wage per hour, the employer pays the difference.

Two practical points follow. Track tips by workweek rather than by pay period, because the shortfall test runs on the week. And keep the record: when a wage claim lands, the employer is the one who has to show the tips actually arrived.

City and County Minimum Wage Rates in Vermont

There are none. No Vermont city, town or county publishes a general minimum wage for private employers, so the state figure is the figure everywhere. The honest answer is one line long, and the only wrinkle is a Burlington rule for city contractors and grantees.

That last row is worth ten minutes if you sell to the City of Burlington. The City Council enacted the Livable Wage Ordinance in November 2001; the city posts the current rate sheet on that page.

The ordinance sets two rates: a lower one where the employer provides employer assisted health insurance, and a higher one where it does not. Covered employees also get 12 days of paid time off a year. The city recalculates the rates each May, effective July 1, and updates the posted sheet.

The ordinance reaches you through a contract rather than through your address, and it is a contractor standard rather than a wage floor for the town. Everyone else in Burlington is on the same $14.42 as the rest of Vermont.

Industry Carve-Outs and Who Sits Outside the State Rate

Vermont has no industry rates in the sense employers usually mean. There is no fast food council rate, no health care rate and no farm rate sitting below the general figure. What Vermont has instead is a list of workers left outside the definition of employee in 21 V.S.A. section 383, which is a different thing and easy to misread.

Sitting outside the state definition is not the same as sitting outside wage law. The federal Fair Labor Standards Act still reaches most of these workers and carries its own floor, its own agricultural rules and its own exemption tests. Treat the second column as a signal to check the federal side, never as permission to set your own number.

Vermont does carve out several industries from its own overtime rule, including hotels, motels and restaurants, retail and service establishments, and seasonal amusement operations. Those carve-outs touch time and a half, not the hourly floor.

Youth, Student, and Training Wages

Vermont has no youth minimum wage and no general training wage. A 16 year old bussing tables in July is owed the same $14.42 as the person who trained them. If you were expecting a teenage rate the way some states run one, there is not one to apply.

One provision sits near the topic, and it is not a self-serve discount. Section 383 leaves students working during all or any part of the school year or regular vacation periods outside the state definition of employee. In plain terms, the state minimum wage law does not cover those students.

The old route to a lower rate is gone. Section 385 used to let the Commissioner recommend a scale of rates for learners, apprentices and persons with disabilities below the regular minimum, and Act 40 of 2025 struck that power, effective July 1, 2025.

Hours and permits for minors are a separate body of rules from the rate you pay them, and the two get confused constantly.

The Minimum Wage Poster Requirement

Vermont requires you to keep a copy of the wage and hour rules posted in a conspicuous place in the area where employees are employed, under 21 V.S.A. section 393. The Commissioner furnishes copies to employers without charge, so there is no reason to buy a poster service for this.

The Minimum Wage poster carries the current rate on its face, which makes it the state posting that has to be replaced every January. The current edition and the rest of the required set are free from the Vermont mandatory workplace posters page, which also holds the Meals and Lodging poster, the Earned Sick Leave poster and the Child Labor poster.

The same section carries the recordkeeping duty: a true and accurate record of the hours worked by each employee and the wages paid, open to inspection by the Commissioner at any reasonable time. Failing to keep those records is separately punishable under section 394, whatever your rates look like.

How the Vermont Rate Relates to the Federal Floor

The federal minimum wage has been $7.25 per hour since July 24, 2009. Vermont sits $7.17 above it, so the state rate is the number you pay and the federal figure never comes into play on the hourly line.

Vermont also wrote the relationship into the statute rather than leaving it to general preemption (federal law overriding conflicting state law). Section 384 provides that if the federal rate is ever greater than the rate calculated for Vermont in a given year, the federal rate becomes the Vermont rate for that year. Vermont employers cannot end up below the national floor.

Federal law still governs a good deal of what surrounds the rate, including hours worked, recordkeeping and the notice rules around a tip credit.

What to Do When the Rate Rises

Treat the January change as a small payroll project rather than one field to edit. Four things move together: the hourly rate, the tipped basic wage, the overtime rate that derives from both, and the poster on the wall.

Keep the worksheet you used, because underpaying is expensive in Vermont. Under 21 V.S.A. section 394 an employer who pays below the applicable rate faces a civil penalty of up to $100 for each day an employee is underpaid.

The employee has a claim of their own on top of that penalty. Under section 395 an employee can recover twice the minimum wage less what was actually paid, plus costs and reasonable attorney fees. An agreement to work for less is not a defense.

If the part that keeps slipping is knowing who sits at which rate across a growing hourly team, that is the kind of thing FirstHR was built to hold. FirstHR is an onboarding and HR platform, not a payroll provider, so it keeps the employee record straight and hands your payroll process a clean set of facts.

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