The Minnesota minimum wage 2026 reflects the state’s annual inflation-based adjustment designed to protect workers’ purchasing power. Effective January 1, 2026, Minnesota will increase its minimum wage rates for both large and small employers, following the state’s automatic indexing law tied to consumer price data. These changes are overseen by Minnesota labor authorities and apply statewide, with specific thresholds based on employer size and annual revenue. Minnesota continues to maintain one of the more structured wage adjustment systems in the country, ensuring predictable increases each year. Understanding the updated 2026 wage rates is essential for employers planning payroll budgets and for employees tracking earnings expectations.
Minnesota Minimum Wage 2026
Minnesota’s minimum wage law distinguishes between large and small employers, unlike the federal system. This distinction affects how much workers are paid depending on where they work and the size of the business.
In this article, we break down the Minnesota minimum wage increase 2026, including updated rates, employer categories, exemptions, and how these changes impact workers across the state.
Overview of Minnesota Minimum Wage Law
Minnesota’s minimum wage law sets pay standards higher than the federal minimum wage. The state uses an annual adjustment mechanism that considers inflation, ensuring wages keep pace with rising costs of living.
The law applies to most workers, though certain exemptions and special rates exist for training wages, youth workers, and some seasonal employees.
Minnesota Minimum Wage Rates for 2026
As of January 1, 2026, Minnesota’s minimum wage rates will increase for both employer categories. The adjustment is based on the prior year’s inflation calculation.
Below is a detailed table outlining the Minnesota minimum wage rates 2026 and related classifications.
| Category | Hourly Rate 2026 | Employer Type | Annual Revenue Threshold | Applies To | Increase Reason | Effective Date | Notes |
|---|---|---|---|---|---|---|---|
| Large Employer | $11.13 | Large business | $500,000+ | Most employees | Inflation adjustment | Jan 1, 2026 | Statewide |
| Small Employer | $9.09 | Small business | Under $500,000 | Most employees | Inflation adjustment | Jan 1, 2026 | Statewide |
| Youth Wage | $9.09 | All employers | N/A | Employees under 18 | Special provision | Jan 1, 2026 | Limited hours |
| Training Wage | $9.09 | All employers | N/A | First 90 days | Entry-level | Jan 1, 2026 | Temporary |
| Federal Minimum | $7.25 | Federal standard | N/A | Reference only | No change | Ongoing | Lower than MN |
| Tipped Employees | Same as base | All employers | N/A | No tip credit | State law | Jan 1, 2026 | Tips not deducted |
| Overtime Threshold | 1.5x rate | All employers | N/A | Over 48 hours | Labor law | Jan 1, 2026 | Weekly |
| Indexing Rule | Annual | Statewide | N/A | All rates | CPI-based | Yearly | Automatic |
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Large vs Small Employers: Key Differences
Minnesota defines employer size by annual gross revenue, not number of employees. Businesses earning $500,000 or more annually are considered large employers.
• Large employers must pay the higher minimum wage rate
• Small employers qualify for a lower but still increasing rate
This structure is designed to balance worker protections with small business sustainability.
How the Minnesota Minimum Wage Increase 2026 Affects Workers
For employees earning near the minimum wage, the 2026 increase means higher base pay and improved earnings stability. Workers in retail, food service, caregiving, and hospitality are among those most impacted.
The increase also affects overtime pay, since overtime is calculated based on the regular hourly rate.
Impact on Employers and Payroll Planning
Employers must update payroll systems before January 2026 to remain compliant. Failure to pay the correct wage can result in penalties, back pay orders, and fines.
Businesses are encouraged to review classifications carefully, especially if revenue fluctuates near the large-employer threshold.
Minnesota Minimum Wage Compared to Federal Law
Minnesota’s wage rates remain significantly higher than the federal minimum wage. When state and federal laws differ, employers must follow the law that provides the greater benefit to employees.
This ensures Minnesota workers receive stronger wage protections than those guaranteed at the federal level.
What to Expect Beyond 2026
Minnesota’s automatic indexing means additional wage increases are likely in future years, depending on inflation trends. Employers and workers can expect continued annual adjustments rather than sudden legislative changes.
This predictability helps businesses plan ahead and gives workers confidence in gradual wage growth.
FAQs on Minnesota Minimum Wage 2026
Q1. When does the Minnesota minimum wage increase take effect in 2026?
It takes effect on January 1, 2026.
Q2. Do tipped employees have a lower minimum wage in Minnesota?
No, Minnesota does not allow a tip credit.
Q3. How is employer size determined for minimum wage purposes?
By annual gross revenue, not number of employees.
Conclusion
The Minnesota minimum wage 2026 reflects the state’s commitment to inflation-based wage growth and worker protection. With higher rates for both large and small employers effective January 1, 2026, employees can expect modest but meaningful pay increases. Employers, meanwhile, must stay informed and compliant to avoid penalties. Understanding the updated wage structure helps both sides prepare for the year ahead and navigate Minnesota’s evolving labor standards with confidence.