TIPPED WORKERS
Tipped Minimum Wage in 2026: Federal $2.13, Tip Credit, and the Seven States That Ban It
Last verified 18 April 2026
The federal cash wage an employer can pay a tipped worker per hour before tips. If tips plus $2.13 do not reach $7.25 per hour, the employer must make up the difference. Seven states do not allow this arrangement at all.
How the Federal Tip Credit Works
The FLSA allows employers to claim a "tip credit" against the minimum wage for workers who regularly receive more than $30 per month in tips. The mechanics are:
- Employer pays $2.13/hr cash wage (the minimum cash wage for tipped workers).
- Employer claims up to $5.12/hr as a tip credit (the difference between $2.13 and $7.25).
- Worker must actually receive at least $5.12/hr in tips for the math to balance.
- If average tips fall below $5.12/hr in any workweek, the employer must pay the difference to ensure total pay reaches at least $7.25/hr.
The $2.13 federal cash wage has not changed since 1991. That is over 33 years frozen while the general federal minimum has risen from $4.25 (1991) to $7.25 (2009).
TIP CREDIT MATH (FEDERAL)
Three Categories of States
CATEGORY 1: NO TIP CREDIT (7 STATES + 1 CITY)
Tipped workers earn full state minimum plus all tips on top
In these states, there is no tip credit and no lower cash wage -- every worker including tipped workers receives the full state or city minimum wage. Tips are additional income on top of that. Flagstaff AZ joined this group on 1 January 2026 as the first non-state jurisdiction to ban the tip credit.
CATEGORY 2: PARTIAL TIP CREDIT (TIPPED RATE ABOVE FEDERAL $2.13)
These states allow a tip credit but require a higher cash wage than $2.13
| State | Standard Rate | Tipped Cash Wage | Max Tip Credit |
|---|---|---|---|
| Arizona | $14.70 | $11.70 | $3.00 |
| Colorado | $15.16 | $12.14 | $3.02 |
| Connecticut (waitstaff) | $16.94 | $6.38 | $10.56 |
| Delaware | $15.00 | $2.23 | $12.77 |
| DC | $17.95 | $10.00 | $7.95 |
| Florida | $14.00 | $9.98 | $4.02 |
| Hawaii | $14.00 | $12.75 | $1.25 |
| Maine | $14.65 | $7.33 | $7.32 |
| Michigan | $13.73 | $5.22 | $8.51 |
| New Jersey | $15.92 | $5.92 | $10.00 |
| New York (NYC) | $17.00 | $13.35 | $3.65 |
| Oregon | $15.45 | $15.45 | None |
| Rhode Island | $16.00 | $3.89 | $12.11 |
| Vermont | $14.01 | $7.01 | $7.00 |
CATEGORY 3: FEDERAL FLOOR ($2.13 TIPPED CASH WAGE)
States including Alabama, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, and Wyoming apply the federal $2.13 tipped minimum or have no state law that exceeds it. In these states, tipped workers can legally receive just $2.13 per hour in cash from their employer, relying on tips to bridge the gap to $7.25 (or the state minimum if higher).
The One Fair Wage Movement
One Fair Wage is a national campaign advocating for the elimination of the federal tip credit. The argument: a $2.13 federal cash wage is inadequate and creates dependency on unpredictable tip income, with disproportionate impact on women (who make up the majority of tipped restaurant workers), workers of colour, and workers in states with lower-tipping cultures.
As of April 2026, One Fair Wage campaigns are active in New York, Illinois, Michigan, and Massachusetts. DC partially eliminated its tip credit in 2022 after a successful ballot initiative (Initiative 82), though the restaurant industry mounted a significant lobbying effort to delay and modify implementation. The DC tipped rate as of 2026 is $10.00 and will continue rising toward the standard $18.40 rate by 2027.
The restaurant industry argues that eliminating the tip credit would force wage increases that would result in menu price rises, reduced hours, and in some cases restaurant closures. Studies are mixed; states that eliminated the tip credit decades ago (California, Washington, Oregon) continue to have large and active restaurant sectors, though their menu prices are noticeably higher than in $2.13-tipped states.
TIP POOLING RULES
Who Can Participate in a Tip Pool?
The 2018 Consolidated Appropriations Act clarified tip pooling rules significantly. If an employer does not claim a tip credit (i.e., pays all workers at least the full minimum wage), back-of-house workers (cooks, dishwashers) can participate in a tip pool. If the employer does claim a tip credit, only front-of-house tipped workers can participate.
Managers and supervisors are categorically barred from participating in any tip pool regardless of circumstances. Employers who improperly retain or redirect tips face liability for the misappropriated tips, an equal amount in liquidated damages, and attorney fees.
Know Your Rights as a Tipped Worker
If you are a tipped worker and your tips plus cash wage do not average at least the applicable minimum wage (federal or state, whichever is higher) in any workweek, your employer owes you the difference. This is a legal obligation, not a courtesy.
Document your hours and tips. If you suspect your employer is not making up the tip shortfall, track your payslips and compare to your tip logs. The FLSA's two-year statute of limitations (three years for willful violations) gives you time to file a complaint.
To report a violation: contact the DOL Wage and Hour Division at 1-866-487-9243 or online at dol.gov/agencies/whd/contact. Complaints are confidential by default. You may be entitled to back pay plus an equal amount in liquidated damages.