Is minimum wage set by state or federal law?
Both federal and state laws can set minimum pay. See the $7.25 federal rate, state examples and where local or tipped worker rules can differ by job.
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What is the federal minimum wage?How do state rates differ?Do minimum wages rise with inflation?What about tips, small employers and city rules?Both federal and state laws set minimum wages. When a worker is covered by both, the higher applicable minimum applies. Local rules and exceptions can change the rate for a particular job.
What is the federal minimum wage?
The federal minimum is $7.25 an hour for covered nonexempt employees. Some jobs and workers are subject to different rules, so coverage matters. The federal minimum wage guidance explains the baseline and the interaction with state law.
How do state rates differ?
The federal state wage table effective July 1, 2026 lists California at $16.90 and Alaska at $14.00 per hour. Texas is listed at the federal rate of $7.25. Alabama has no state minimum wage law, but covered employers must still pay the federal minimum.
Federal wage table effective July 1, 2026
These examples are basic rates, not a determination of what a particular employer must pay. State schedules can change after the table's effective date. Consult the state labor office and local rules for the rate that applies now.
Do minimum wages rise with inflation?
Some states adjust their minimum wages using a formula, while others set future increases in law. California's state wage entry describes an annual formula. The applicable rate and timing depend on the state; a national inflation rate does not automatically set every minimum wage.
What about tips, small employers and city rules?
Tipped workers can be subject to special rules. The federal tipped employee guidance explains the conditions for an employer to count tips toward its wage obligation. State rules may be more protective. Employer size, occupation and local ordinances can also matter, so check the relevant state and city labor office.
To put pay in context, Wage estimates pay for occupations and places; its estimates are not minimum wage determinations. Money Value compares purchasing power over time. See credits for data sources.
The federal and state examples were checked November 3, 2026. Photo: Wolfmann, CC BY-SA 4.0.
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