Minimum-wage workers in 21 states saw bigger paychecks starting January 1, 2025, with wage increases impacting an estimated 9.2 million workers and raising pay by a total of $5.7 billion. While the federal minimum wage remains unchanged, state and local governments continue advancing worker compensation through independent legislation.
Federal Minimum Wage Status in 2025
The federal minimum wage continues to sit at $7.25 an hour, a rate that hasn’t budged since 2009. Despite multiple legislative proposals, including the Raise the Wage Act that would gradually increase the federal rate to $17 by 2030, no federal increase has been enacted.
Why States Are Taking Action
With the federal rate stagnant for over 15 years, the spending power of one dollar is not what it used to be, putting workers in a tough spot as prices for groceries and housing have risen over time. States have responded by establishing their own minimum wage laws to better reflect local cost-of-living expenses.
21 States Raising Minimum Wage in 2025
The following 21 states increased their minimum wages on January 1, 2025: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington.
Complete 2025 State Minimum Wage Breakdown
Highest Minimum Wage States
Washington State
- $16.66 per hour (highest state rate)
- Adjusted annually for inflation
California
- $16.50 per hour for all employers
- Fast-food workers earn $20 per hour (for chains with 60+ locations)
New York
- Varies by region: NYC, Long Island, and Westchester at higher rates
- Rest of state at $16.00 per hour
Washington, D.C.
- $17.50 per hour (highest in the nation for a jurisdiction)
States Reaching $15 Per Hour Milestone
Increases in Delaware, Illinois, and Rhode Island bring those states’ minimums to $15 an hour, meaning 10 states and Washington, D.C., now have $15 or higher minimum wage.
States with $15+ Minimum Wage (2025):
- California: $16.50
- Connecticut: $15.69
- Delaware: $15.00
- Illinois: $15.00
- Maryland: $15.00
- Massachusetts: $15.00
- New Jersey: $15.49
- New York: $16.00+
- Rhode Island: $15.00
- Washington: $16.66
- Washington D.C.: $17.50
Mid-Range State Increases
Michigan
- $10.56 per hour on January 1, then $12.48 per hour on February 21, 2025
Missouri
- $13.75 in 2025, rising to $15.00 in January 2026
Florida
- Scheduled to reach $14.00 in 2025
- On path to $15.00 by 2026
Arizona, Colorado, Maine, Minnesota, Montana
- Wages ranging from $13.85 to $15.00
- Most indexed to annual inflation adjustments
States Using Federal Minimum Wage ($7.25)
Twenty states use the $7.25 minimum wage: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, and Wyoming.
Local Minimum Wage Increases
Beyond state-level changes, an additional 48 cities and counties raised their minimum wages above their state wage floors starting January 1, mostly in California, Colorado, and Washington.
Highest Local Minimum Wages
Tukwila, Washington
- $21.10 per hour (highest minimum wage in the nation in 2025)
Denver, Colorado
- $18.81 per hour
California Cities
- 29 cities and counties in California increased their minimum wages in January, with every locality reaching at least $17 an hour except Oakland
How Wage Increases Are Determined
States use different methods to adjust minimum wages:
1. Inflation-Based Adjustments
California is one of 14 states adjusting the minimum to increase for inflation, with the average full-time minimum-wage worker in these states making around $420 more annually.
2. Scheduled Legislative Increases
Five states are bumping up the statewide minimum wage through previously adopted legislation, implementing pre-planned incremental raises toward target wages.
3. Voter-Approved Ballot Measures
Two states—Nebraska and Montana—are making changes after voters passed ballot measures.
Special Wage Categories in 2025
Tipped Employees
In some jurisdictions, the minimum cash wage required for tipped employees also increases with the minimum wage. However, the federal tipped minimum remains $2.13 per hour, provided total earnings (tips + wages) meet the regular minimum.
States with no tip credit:
- Alaska, California, Minnesota, and Montana don’t allow employers to apply a tip credit toward the minimum wage. In such cases, you must pay tipped employees the full minimum in direct cash wages
Youth and Training Wages
Some states maintain separate wage rates for workers under 20 during their first 90 days of employment, though this varies significantly by jurisdiction.
Impact on American Workers
Who Benefits Most?
Women make up almost 60% of workers seeing a raise. A little over 11% of workers seeing higher paychecks are Black, and nearly 40% are Hispanic.
Economic Effects
Recent studies from the University of Michigan found that minimum wage hikes generally benefit lower-wage workers with minimal impacts to independent businesses, with typical low-earning workers earning roughly $1,500 more per year than similar workers in states without increases.
Real-World Research: California’s $20 Fast Food Wage
Early-stage research from Harvard University and the University of California Berkeley showed that California’s new $20 fast-food minimum wage benefited workers’ well-being while having minimal negative effects on staffing, hours and benefits.
What Employers Need to Know
Compliance Requirements
When minimum wage increases take effect, employers must:
- Update payroll systems immediately to reflect new rates
- Adjust all affected employee wages before the effective date
- Post updated minimum wage notices in all work locations
- Maintain accurate payroll records for potential audits
- Check multiple jurisdictions if operating in different locations
Multi-State Operations
If an employee is subject to more than one minimum wage requirement (such as federal, state and local), you should pay the rate most generous to the employee.
Exempt vs. Non-Exempt Employees
In some states, including Alaska, California, Colorado, Maine, New York and Washington, the minimum salary required to be classified as exempt from overtime is tied to the minimum wage or is otherwise adjusted annually.
Future Minimum Wage Outlook
2026 and Beyond
EPI found that 19 states and Washington, D.C., will have at least a $15 minimum wage by 2027. Several states have scheduled increases extending through 2027 and beyond.
Scheduled Future Increases:
- Florida: $15.00 by 2026
- Missouri: $15.00 by January 2026
- Hawaii: $16.00 beginning January 1, 2026
- Rhode Island: $16.00 in 2026, $17.00 by January 1, 2027
Federal Legislation Proposals
While the Raise the Wage Act proposes increasing the federal minimum to $17 by 2030, this remains legislative proposal without enacted status. Congressional efforts to hike the federal minimum wage have stalled out.
Frequently Asked Questions
Q: Has the federal minimum wage increased in 2025? A: No. The federal minimum wage remains at $7.25 per hour, unchanged since 2009.
Q: Which state has the highest minimum wage? A: Washington State at $16.66 per hour, though Washington D.C. has the highest rate at $17.50.
Q: Do I get paid the state or federal minimum wage? A: You receive whichever rate is higher. If your state minimum exceeds the federal rate, your employer must pay the state rate.
Q: Are all workers covered by minimum wage laws? A: Most workers are covered, but exemptions exist for certain categories including some agricultural workers, seasonal employees, and workers with disabilities under specific circumstances.
Q: How often do states adjust minimum wages? A: Many states adjust annually based on inflation indices. Others make changes through periodic legislation or voter-approved ballot measures.
Q: What if my city has a different minimum wage than my state? A: Your employer must pay the highest applicable minimum wage among federal, state, and local requirements.
Key Takeaways
- Federal minimum wage remains at $7.25 with no increase since 2009
- 21 states increased minimum wages on January 1, 2025, affecting 9.2 million workers
- 10 states now have $15+ minimum wages, with more reaching this threshold by 2027
- Local jurisdictions set even higher rates, with some exceeding $21 per hour
- Inflation adjustments are automatic in 14 states, ensuring annual increases
- Workers gained $5.7 billion collectively from 2025 state wage increases
- Employers must comply with the highest applicable rate (federal, state, or local)
The landscape of American wages continues evolving at state and local levels, providing millions of workers with increased earning power even as federal policy remains unchanged. Workers and employers should regularly monitor state labor department websites for the most current information affecting their jurisdictions.
