What’s the Minimum Wage for Tipped Employees?
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Updated on Nov. 6.
Six states had wages and sick leave on the ballot this election season. Here’s how the measures fared.
Alaska: Ballot Measure 1
Increases the minimum wage to $15 per hour by July 2027. The current minimum wage is $11.73 per hour.
Requires businesses with 15 employees or more to provide employees with sick leave. Employees have the ability to accrue up to 56 hours of paid sick leave per year.
Requires businesses with fewer than 15 employees to provide employees with sick leave. Employees have the ability to accrue up to 40 hours of paid sick leave per year.
Prohibits employers from taking adverse action against an employee who refuses to attend employer-sponsored meetings regarding religious or political matters.
Result: Votes are still being counted.
Arizona: Proposition 138
Allows tipped workers to be paid 25% less per hour ($3.58) than the current minimum wage ($14.35). That means tipped workers can be paid a total of $10.77 per hour. But the tipped worker’s take-home pay, including tips, must equal that minimum wage plus $2 per hour.
Currently, tipped workers may earn $11.35 per hour — three-dollars less than the minimum wage of $14.35 per hour — so long as their take-home pay with tips equals the minimum wage.
Result: Struck down.
California: Proposition 32
Increases the state minimum wage to $18 per hour by 2026 for all employers. After that, rate increases are tied to the cost of living.
Employers with 26 or more employees must raise wages from the current wage of $17 per hour to $18 per hour in 2025. Employers with 25 or fewer employees must raise wages from the current wage of $16 per hour to $17 per hour in 2025 then increase to $18 per hour in 2026.
Result: Votes are still being counted.
Massachusetts: Question 5
Gradually increases the wage for tipped employees on Jan. 1 of each year until it matches the state minimum wage on Jan. 1, 2029. Tipping would still be permitted in addition to the minimum wage. The current minimum wage for non-tipped employees is $15 per hour, while the current minimum wage for tipped employees in Massachusetts is $6.75 per hour plus tips.
Here’s how the increases would work:
2025: Increase to 64% of the state minimum wage.
2026: Increase to 73% of the state minimum wage.
2027: 82% of the state minimum wage.
2028: Increase to 91% of the state minimum wage.
2029: Increase to 100% of the state minimum wage.
Result: Struck down.
Missouri: Proposition A
Establishes a $13.75 per hour minimum wage by 2025, which would rise to $15 per hour by 2026. The current minimum wage in Missouri is $12.30 per hour.
Requires employers to provide employees with one hour of paid sick leave for every 30 hours worked.
Requires businesses with 15 or fewer employees to provide at least five paid sick days per year while businesses that employ more than 15 people must provide at least seven paid sick days per year.
Result: Approved.
Nebraska: Initiative 436
Requires businesses to provide earned paid sick leave for employees:
Businesses with at least 20 employees must provide up to seven paid sick days.
Businesses with fewer than 20 employees must provide up to five paid sick days.
Result: Approved.
Working out the minimum wage for workers who receive tips, such as food servers, can be complex. Tipped employees include those who rely on tips from customers to supplement their wages. A tipped employee typically receives more than $30 per month in tips, according to the Department of Labor.
Tipped employees must receive a minimum wage of $2.13 per hour, known as a cash wage. That cash wage is combined with tips to reach the federal minimum wage of $7.25 per hour. (Many states and localities, listed below, have minimum wages set above the federal rate).
» MORE: What is the minimum wage?
Earn up to $250/year in cash rewards
With a NerdWallet+ membership, it's easy to rack up rewards for the smart decisions you're already making, like checking your credit score.
Tips are considered a “tip credit,” which allows employers to pay employees below the federal minimum wage.
Employers can credit up to $5.12 per hour in tips against a worker's earnings. If an employee’s wages (at least $2.13 per hour) plus tips is less than $7.25 per hour, their employer is required to make up the difference.
Tipped minimum wages by state
Minimum tipped wages and maximum tip credits vary by state and even city.
The District of Columbia has the highest minimum wage for tipped workers in the country. As of the 2022 election, Washington, D.C., residents voted to incrementally increase the minimum wage for tipped workers each year until July 1, 2027. At that point, the tipped minimum will be set to match the same minimum as the nontipped minimum wage that year. As of May 1, 2023, the minimum wage is $8 per hour for tipped workers and $17 for nontipped workers.
Some cities have separate tipped minimum wages and they're typically higher than state tipped minimums. Here are a few large cities with minimum tipped wages above the state minimums.
As of Jan. 1, Seattle implemented a new tipped minimum. For smaller employers with 500 or fewer employees (most tipped positions would fall under this designation) the minimum wage is $17.25 per hour so long as employees earn at least $2.72 per hour in tips.
As of Jan. 1, the tipped minimum wage in Los Angeles is $16.78 per hour.
In October 2023, Chicago eliminated subminimum wages for tipped workers. The move would brought these workers' pay up to the city's minimum wage of $15.80 per hour.
On July 12, 2023, New York City implemented a $17.96 per hour minimum wage for app-based restaurant delivery workers as of July 12. It’s the first wage requirement of its kind in the U.S. The rule applies to all apps that pay for the time a worker is connected to an app and doesn’t include tips. For apps that only pay for trip time, delivery workers must be paid at least $0.50 per minute of the trip time, not including tips.
