2025 State Minimum Wage Updates: State-by-State Breakdown

At Lift HCM, we understand how challenging it can be to stay compliant with ever-changing wage laws while balancing financial goals. As a business leader, you may feel overwhelmed by the intricacies of minimum wage updates, concerned about how they impact your workforce, and unsure of the best way to prepare. This guide breaks down the key updates for 2025, explains their implications for businesses and workers, and offers actionable steps to ensure you’re ready for the changes ahead.

Table of Contents

• What Are Minimum Wage Laws and Why Do They Change?
• A State-by-State Breakdown of 2025 Minimum Wages
• Strategies for Employers

What Are Minimum Wage Laws and Why Do They Change?

Minimum wage laws exist to ensure workers receive a fair baseline hourly pay for their labor. Introduced during the Great Depression, these laws continue to evolve, addressing inflation, cost of living, and economic disparities across regions.

Key factors driving annual changes:

• Inflation indexing: Many states tie wage increases to the Consumer Price Index (CPI).
• Legislative updates: Voter-approved measures or state mandates.
• Federal minimum wage debates: Although stagnant at $7.25 since 2009, federal discussions often drive state-level momentum.

For 2025, numerous states have implemented scheduled increases or CPI-based adjustments to better align with economic demands. Local variations, such as those in Chicago or Cook County, can further complicate compliance.

A State-by-State Breakdown of 2025 Minimum Wages

More than 20 states have announced minimum wage increases for 2025. The federal minimum wage remains at $7.25 an hour, a rate last adjusted in July 2009; however, states have enacted their own minimum wages, either outright or linked to inflation. 

The following states have raised their minimum wage as of January 1st, 2025:

• Alaska
• Arizona
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Illinois
• Maine
• Michigan
• Minnesota
• Missouri
• Montana
• Nebraska
• New Jersey
• New York
• Ohio
• Rhode Island
• South Dakota
• Vermont
• Virginia
• Washington

The federal Fair Labor Standards Act (FLSA) sets minimum wage and overtime standards for most employers. If you're unsure about coverage, consult an employment lawyer. The federal minimum wage is $7.25 per hour. Tipped employees (receiving over $30/month in tips) can be paid a $2.13 base wage if that plus tips equals at least $7.25 (this is the "tip credit").

State and local laws set minimum wages, sometimes with different tip credit rules. Employees get the highest applicable wage. The chart shows state minimum and tipped wages as of January 1, 2025, including increases. It includes state rates at or above the federal minimum and excludes public contracts. Blank rows mean the law applies to all employers. If no state law exists, the FLSA applies. The chart doesn't cover overtime, premium/hazard pay, or detailed tip credit rules. Check local requirements.

*Employers in states without minimum wage laws, where the minimum wage is below the federal rate of $7.25 per hour, are required to adhere to the federal minimum wage for all employees covered by the Fair Labor Standards Act.

• Federal Minimum Wage Rate: $7.25
• Federal Minimum Tipped Wage Rate: $2.13
• Federal Maximum Tip Credit: $5.12
• Tipped employees must regularly earn at least $30 per month in tips

*Georgia: 7.25 (if covered under FLSA); $5.15 (if not covered under FLSA); Special “training rate” of $4.25 applies to new employees under the age of 20 for their first 90 days. Full time students in high school or college who work 20 hours or less per week can be paid $6.16, or $85 of
the standard minimum wage if their job fits a work-study program or other specified situations.

*Hawaii: Increasing to $16.00 1/1/26; $18.00 1/1/28. Tipped employees must regularly earn at least $20 per month in tips; combined wage must be at least $7.00 more than the applicable
minimum wage.

*Oregon Urban/Standard Counties: An employer’s location affects minimum wage rate.
Areas not in Portland’s urban growth boundary or one of the listed nonurban counties (urban counties) (Benton, Clackamas, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Wasco, Washington, Yamhill counties)
Adjusted annually July 1.

*Oregon Portland Metro Area: Within Portland’s urban growth boundary (metro area) (including portions of Clackamas, Multnomah, and Washington counties); Adjusted annually July 1.

Strategies for Employers

Adapting to wage changes is about more than just compliance; it’s an opportunity to refine your operations and strengthen employee trust. Here are practical steps to help your business stay ahead:

• Conduct Regular Wage Audits: Ensure compliance with both state and local wage laws.

• Communicate With Employees: Transparently share wage updates and explain how they impact paychecks.

• Leverage Technology: Use payroll software to automatically update rates and calculate overtime.

• Plan for Budget Adjustments: Account for higher labor costs in financial forecasts.

• Stay Proactive: Monitor legislative updates throughout the year.

Ready to Conquer 2025 Wage Updates? Here’s Your Game Plan

Let’s face it—minimum wage changes can feel like a never-ending maze, but you don’t have to navigate it alone. With this guide, you’ve gained the clarity and confidence to tackle 2025’s updates head-on.

Think back to where you started: confusion, uncertainty, maybe even a little frustration about what these changes mean for your business. Now, you’ve got the tools to adapt. You understand the key updates, their implications, and actionable strategies to stay compliant and ahead of the curve.

The road forward doesn’t have to be overwhelming. At Lift HCM, we specialize in making compliance simple and seamless. From automated payroll solutions to expert guidance, we’re here to be your partner in success. Let’s transform wage compliance from a source of stress into an opportunity to elevate your business!