Updated on July 1.
As of July 1, 2026, two states and the District of Columbia have raised their hourly minimum wage:
- Alaska: $14 (from $13).
- The District of Columbia: $18.40 (from $17.95).
- Oregon’s new minimum wage comprises three tiers:
- Non-urban counties: $14.55 (from $14.05).
- General/standard: $15.55 (from $15.05).
- Portland metro: $16.80 (from $16.30.
Many states make annual adjustments to minimum wage to account for inflation on Jan. 1 each year.
The federal minimum wage of $7.25 per hour has not budged since 2009 despite a steady increase to the costs of living, which has accelerated into skyrocketing inflation in recent years.
As of Jan. 1, 2026, 31 states and Washington, D.C., have minimum wages set above the federal minimum.
In addition, more than 60 localities have set minimum wages above their state minimum wage.
Minimum wage over time
The minimum wage has not kept pace with inflation when you look at nominal wages (not adjusted for inflation) versus their spending power in 2023 numbers (adjusted for inflation).
Because the federal minimum wage has not changed since 2009, its real purchasing power has decreased dramatically. Decreased purchasing power means it’s even more difficult for workers to live on a minimum wage.
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State minimum wages
The minimum wage varies by state. Five states have no minimum wage laws, but the federal minimum wage still applies; those include Alabama, Louisiana, Mississippi, South Carolina and Tennessee. As noted above, some localities have set their own minimum wage above the state level.
Does raising the minimum wage cause inflation?
No. The federal minimum wage is set by the government and does not directly correlate with inflation. The current inflationary conditions were not caused by the minimum wage, which has not changed since 2009.
Do all workers earn at least the minimum wage?
All workers covered by the Fair Labor Standards Act must be paid at least the federal minimum wage and may earn more if the state minimum wage is higher.
According to the Department of Labor, workers not covered by the FLSA, who may earn less than minimum wage, include:
- Employees of certain seasonal amusement or recreational establishments.
- Employees of certain small newspapers or newspaper delivery workers.
- Seamen employed on foreign vessels or employees engaged in fishing operations.
- Certain farmworkers.
- Casual babysitters.
- Companions to older people or the infirm.
- Executive, administrative and professional employees.
Those workers are also exempt from overtime pay. (Learn more about who is — and isn’t — eligible for overtime pay on the Department of Labor website.)
Minimum wage for tipped workers
Do tipped workers earn the minimum wage?
Tipped employees rely on tips from customers to supplement their wages. They must be paid a minimum of $2.13 per hour — known as a cash wage — in addition to tips in order to reach the federal minimum of $7.25.
» MORE: Is the pay gap real?
What is a tip credit?
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.
Are tips taxed?
Tips are taxed as income. While campaigning, President Donald Trump promised to create a “no tax on tips” policy, and it became law after the passage of the One Big, Beautiful Bill Act in 2025. The “no tax on tips” policy applies, with exceptions, to about 70 job titles.
What is the median household income in the U.S.?
The median household income in the U.S. is $83,730, according to the U.S. Census Bureau Current Population Survey data for 2022. Find out the median household income in your area.
