Texas Minimum Wage 2026: Federal Floor, No State Increase

Texas is one of the most employer-friendly states in the nation when it comes to minimum wage law. The state minimum wage is $7.25 per hour — the exact same rate as the federal minimum wage under the Fair Labor Standards Act (FLSA) — and it has not been raised since July 24, 2009. Texas state law also preempts cities and counties from setting their own higher minimum wage rates, meaning there is no patchwork of local ordinances to navigate. For employers, this makes compliance straightforward compared to states like California or New York. However, there are still federal obligations, tipped employee rules, and overtime requirements that every Texas employer must understand. This guide breaks down everything you need to know about minimum wage in Texas for 2026.

Current Texas Minimum Wage Rate

As of 2026, the Texas minimum wage is $7.25 per hour. This rate applies to all covered, non-exempt employees in the state, regardless of employer size, industry, or location within Texas. There is no separate rate for small employers versus large employers, and no industry-specific minimums like those found in California or New York.

The Texas minimum wage is set under Chapter 62 of the Texas Labor Code, which provides that the state minimum wage matches the federal minimum wage under the FLSA. If the federal rate were to increase, the Texas rate would automatically increase to match it. However, as of February 2026, there has been no increase to the federal minimum wage since 2009.

Key facts about the current rate:

• Standard minimum wage: $7.25/hr
• Tipped employee cash wage: $2.13/hr (with tip credit)
• Youth minimum wage: $4.25/hr for employees under 20 during their first 90 consecutive calendar days of employment (federal provision)
• Student learner rate: $6.16/hr (85% of minimum wage) under a DOL-certified program
• Full-time worker annual gross at minimum wage: $15,080 (based on 2,080 hours/year)

History of the Texas Minimum Wage

Texas has never set a state minimum wage above the federal rate. The state has consistently matched the federal floor, and the legislature has shown no appetite for enacting a higher state-specific rate. Here is the timeline of minimum wage changes affecting Texas workers:

• 1997: Federal minimum wage increased to $5.15/hr (effective September 1, 1997). Texas followed.
• 2007: Federal minimum wage increased to $5.85/hr (effective July 24, 2007). Texas followed.
• 2008: Federal minimum wage increased to $6.55/hr (effective July 24, 2008). Texas followed.
• 2009: Federal minimum wage increased to $7.25/hr (effective July 24, 2009). Texas followed.
• 2010-2026: No change. The $7.25/hr rate has remained in place for over 16 years.

There have been periodic proposals at both the federal and state level to increase the minimum wage. In the Texas Legislature, bills to raise the state minimum wage have been introduced in multiple sessions — including proposals for $10.10/hr, $12.00/hr, and $15.00/hr — but none have advanced through the committee process. At the federal level, the Raise the Wage Act (proposing a gradual increase to $15.00/hr) has been introduced in Congress multiple times but has not passed both chambers.

For the foreseeable future, the $7.25/hr rate is likely to remain in effect in Texas unless federal legislation is enacted.

Tipped Minimum Wage and Tip Credit

Texas follows the federal tipped employee provisions of the FLSA. This is critically important for restaurants, bars, hotels, and other hospitality businesses that employ tipped workers.

Under the FLSA, a "tipped employee" is one who customarily and regularly receives more than $30 per month in tips. For tipped employees, the employer may take a tip credit, which allows the employer to pay a lower direct cash wage as long as the employee's tips bring total compensation up to at least the full minimum wage.

The current tipped wage structure in Texas:

• Direct cash wage (minimum): $2.13 per hour
• Maximum tip credit: $5.12 per hour ($7.25 - $2.13 = $5.12)
• Total minimum compensation: $7.25 per hour (cash wage + tips must equal at least this amount)

If an employee's tips in a given workweek, combined with the $2.13/hr cash wage, do not equal at least $7.25 for every hour worked, the employer must make up the difference. This is called the tip credit shortfall, and failure to pay it is a minimum wage violation.

Tip Pooling Rules

Under the 2018 amendments to the FLSA (the Consolidated Appropriations Act), tip pooling rules work as follows in Texas:

• If the employer takes a tip credit (pays $2.13/hr), tips may only be pooled among traditionally tipped employees — servers, bartenders, bussers, and similar front-of-house positions.
• If the employer does not take a tip credit (pays the full $7.25/hr or more), tips may be pooled among both tipped and non-tipped employees, including back-of-house staff like cooks and dishwashers.
• Managers and supervisors may never participate in a tip pool, regardless of whether a tip credit is taken.

Local Preemption: No City or County Minimum Wages

This is one of the most important facts for Texas employers to understand. Texas state law preempts local governments from establishing minimum wage rates above the state/federal level.

In 2003, the Texas Legislature passed Section 62.0515 of the Texas Labor Code, which explicitly prohibits municipalities and counties from adopting, enforcing, or maintaining an ordinance, order, or rule that requires an employer to pay a minimum wage above the rate set under state or federal law. This preemption applies to all political subdivisions of the state.

This means:

• The City of Austin cannot set a $15/hr minimum wage for private employers within city limits.
• Harris County (Houston) cannot require employers to pay above $7.25/hr.
• No Texas city, county, or special district can create local wage floors.

While some Texas cities (including Austin and San Antonio) have in the past debated or attempted to pass local minimum wage ordinances, these efforts have been blocked by the state preemption statute. In 2018, the City of Austin passed a resolution calling for a $15/hr minimum wage, but it was symbolic and legally unenforceable for private employers due to state preemption.

Overtime Rules in Texas (FLSA Only)

Texas has no state overtime law. All overtime obligations for Texas employers come from the federal Fair Labor Standards Act. This makes Texas considerably simpler to navigate than states like California (which has daily overtime) or Colorado (which has specific state overtime provisions).

Under the FLSA, overtime rules are straightforward:

• Overtime threshold: Non-exempt employees must be paid overtime for all hours worked in excess of 40 hours in a workweek.
• Overtime rate: Time-and-a-half (1.5 times the employee's regular rate of pay).
• No daily overtime: There is no daily overtime requirement in Texas. An employee who works 12 hours in a single day but only 36 hours in the workweek is not entitled to overtime.
• No double-time: Texas/FLSA does not require double-time pay for any reason (unlike California, which requires double-time after 12 hours in a day).
• Workweek definition: A workweek is any fixed, regularly recurring period of 168 hours (7 consecutive 24-hour periods). The employer may designate any day and time as the start of the workweek.

For a minimum-wage employee in Texas, the overtime rate is $10.875 per hour ($7.25 x 1.5). However, remember that the regular rate of pay used to calculate overtime must include all non-discretionary bonuses, shift differentials, and certain other forms of compensation — not just the base hourly rate.

Salary Exemption Threshold

Because Texas has no state-specific overtime or minimum wage law above the FLSA, the salary threshold for the white-collar exemptions (executive, administrative, and professional) is determined entirely by federal rules.

Under the current FLSA regulations, to qualify for the white-collar salary exemption, an employee must:

• Be paid on a salary basis (not hourly)
• Earn at least $684 per week ($35,568 per year)
• Perform duties that meet the specific duties test for the executive, administrative, or professional exemption

The U.S. Department of Labor has proposed increasing the salary threshold multiple times in recent years. In 2024, the DOL issued a final rule that would have raised the threshold to $1,128 per week ($58,656/year) effective July 1, 2024, with a further increase to $58,656 on January 1, 2025. However, this rule was struck down by a federal court in Texas (Eastern District of Texas) in November 2024, and the threshold reverted to the prior $684/week level. As of February 2026, the $684/week threshold remains in effect.

How Texas Compares to Other States

Texas is one of 20 states (as of 2026) that have a minimum wage at or below the federal $7.25/hr level — meaning the federal rate is the effective minimum wage in those states. Here is how Texas stacks up against some of the states where employers commonly operate:

• Texas: $7.25/hr (federal floor)
• California: $16.50/hr (more than double the Texas rate)
• New York (NYC): $16.00/hr
• Florida: $13.00/hr (rising to $15.00/hr by September 2026)
• Washington: $16.66/hr
• Colorado: $14.81/hr
• Arizona: $14.70/hr
• Georgia: $7.25/hr (federal floor applies)
• Wyoming: $7.25/hr (federal floor applies)
• Louisiana: No state minimum wage law — federal floor applies

For employers, the low minimum wage in Texas can be a competitive advantage in terms of labor costs. However, in practice, market conditions in Texas — particularly in metro areas like Dallas-Fort Worth, Houston, Austin, and San Antonio — mean that most employers pay well above $7.25/hr to attract and retain workers. The actual average hourly wage in Texas across all occupations is significantly higher than the legal minimum.

Out-of-State Payroll Considerations

If your Texas-based business has employees working in other states — or if you are expanding from another state into Texas — you need to be aware of multi-state payroll compliance issues.

Because Texas has no state income tax and relies on the federal minimum wage, payroll in Texas is simpler than in most other states. However, if you have employees in states with higher minimum wages, state income taxes, or additional payroll obligations, you must comply with each state's laws for employees working in that state.

For multi-state payroll management, consider using a payroll provider that specializes in handling compliance across multiple jurisdictions. PDS Payroll is an excellent option for businesses that need to manage payroll across state lines, offering dedicated support for multi-state tax filings and compliance. and also handle multi-state payroll effectively and can automate the different wage and tax requirements for each state where you have workers.

Frequently Asked Questions

Can a Texas city pass a $15/hr minimum wage?

No. Texas Labor Code Section 62.0515 preempts all local minimum wage ordinances. No city, county, or political subdivision in Texas may require private employers to pay above the state/federal minimum wage of $7.25/hr. This is settled law and has been in effect since 2003.

Does Texas have a different minimum wage for small businesses?

No. Texas has no size-based minimum wage tiers. The $7.25/hr rate applies to all employers covered by the FLSA, regardless of the number of employees. Very small employers not covered by the FLSA (enterprises with less than $500,000 in annual gross sales whose employees are not individually engaged in interstate commerce) may technically not be subject to the federal minimum wage, but this exception is narrow and applies to very few businesses.

Are there any Texas industries with a higher minimum wage?

No. Unlike California (which has industry-specific rates for fast food and healthcare workers), Texas has no industry-specific minimum wage rates. The $7.25/hr rate applies uniformly across all industries.

Can I pay a training wage or subminimum wage?

Under federal law, employers may pay a youth minimum wage of $4.25/hr to employees under age 20 during their first 90 consecutive calendar days of employment. After 90 days (or when the employee turns 20, whichever comes first), the full $7.25/hr rate applies. Additionally, employers holding a DOL certificate may pay subminimum wages to workers with disabilities under Section 14(c) of the FLSA, though this program is being phased out.

What happens if the federal minimum wage increases?

If Congress raises the federal minimum wage, the Texas minimum wage will automatically increase to match. Under Texas Labor Code Chapter 62, the state minimum wage is tied to the federal rate. No state legislative action is needed for the Texas rate to adjust upward.

Is overtime required for working more than 8 hours in a day?

No. Texas follows the FLSA, which only requires overtime after 40 hours in a workweek. There is no daily overtime requirement. An employee could work four 10-hour days and have no overtime obligation, as long as total weekly hours do not exceed 40.