Indiana’s minimum wage has held steady at $7.25 since 2009. While the state simply follows the federal rate, business owners still need to navigate specific state rules for any workers who might fall outside of federal coverage.
What you’ll learn
What you’ll learn
Key takeaways
- Indiana’s minimum wage is currently $7.25 per hour, which aligns with the federal rate established by the Fair Labor Standards Act
- Employers can pay a lower cash wage of $2.13 per hour to tipped employees, provided their total earnings meet the $7.25 hourly minimum
- A training wage of $4.25 per hour is permissible for new employees under age 20 during their first 90 days of employment
- Businesses must display an updated minimum wage poster from the Indiana Department of Labor in a location all employees can see it
- Indiana law requires employers to pay workers at least bi-weekly and maintain accurate payroll records for a minimum of three years
You also need to account for specific exemptions and reporting requirements to remain compliant. To help you understand how these rules apply to your business, let’s explore the Indiana minimum wage for who’s exempt, and how to stay compliant.
What is the Indiana minimum wage in 2026?
The Indiana minimum wage is $7.25 an hour, the same as the federal minimum. Unlike some neighboring states, Indiana has not changed its minimum wage since 2009. The state follows the federal standard set under the Fair Labor Standards Act (FLSA). This rate applies to non-exempt employees across the state, regardless of business size or industry.
Will Indiana minimum wage go up?
There is a proposal to raise the federal minimum wage to $17 by 2030, which, if implemented, would end up applying to Indiana. However, there’s no state plans in the works for 2026 or beyond. If the minimum wage in Indianapolis, Indiana, or any other city were to inch up, it would require action by the Indiana General Assembly or local ordinances.
An increase in the minimum wage would:
- Increase payroll expenses
- Require updates to the payroll system and employee records
- Affect pay structures to prevent wage compression
- Impact hiring decisions and pricing strategies
Who is exempt from Indiana minimum wage?
Some employees are exempt from Indiana minimum wage.
Tipped employees
You can pay tipped employees a cash wage of $2.13 per hour as long as their tips bring total pay to at least $7.25. If the tips fall short, you must cover the difference. For example, if you own a restaurant, you can pay the Indiana minimum wage for servers, which is $2.13 per hour plus $5.12 in tips to meet the $7.25 requirement. If the tips average only $4.00 per hour, you must add $1.12 per hour to reach the required minimum pay.
Training employees
New hires under 20 years old can receive a training minimum wage of $4.25 per hour during their first 90 days of employment. If you’re a retail store owner, for example, you can hire a 19-year-old employee and pay them $4.25 during training. However, after 90 days, or if they turn 20 during the training period, you must pay them the regular Indiana minimum wage.
Student workers
You can pay student workers 85% of the minimum wage ($6.16 per hour) for up to 20 hours per week when schools are in session and 40 hours when school is out. A good example is a small coffee shop near a college. The employer can hire a student barista and pay 85% of the minimum wage for up to 20 hours a week when school is ongoing.
Outside salespersons and select administrative or executive employees
Under FLSA, outside sales, executive, and administrative employees who meet specific duties and salary thresholds are exempt from minimum wage and overtime rules.
How Indiana minimum wage compares to neighboring states
If you want to compare the US minimum wage by state, Indiana ranks among those that follow the federal rate. Neighboring states like Ohio and Illinois have higher rates, which can influence hiring and retention, especially if your business is near state borders.
| State | Minimum wage (2026) | Tipped wage | Compliance nuances |
| Indiana | $7.25 | $2.13 |
|
| Illinois | $15.00 | $9.00 |
|
| Ohio | $11.00 | $5.50 |
|
| Kentucky | $7.25 | $2.13 |
|
| Michigan | $13.73 | $5.49 |
|
Compliance requirements for Indiana employers
To stay compliant with wage and hour laws, you must meet several state and federal requirements that go beyond paying the correct Indiana minimum wage in 2026.
Post wage notices
Indiana minimum wage laws require you to display the current Indiana minimum wage poster where employees can easily see it. You can head to the Indiana Department of Labor website and download the updated poster. Or, OnPay partners with PosterElite to automate this process. No matter how you set this up, just remember to put them in high-traffic areas, such as near time clocks or employee entrances.
Pay frequency and direct deposits
You are required to pay your employees at least bi-weekly. You can use direct deposit as a payment method, but only with the employee’s written consent. If you’re running a multi-state business, review direct deposit rules by state to comply with each state’s requirements before processing payments.
Recordkeeping
Indiana laws require employers to maintain accurate payroll records that document hours worked, wages paid, and deductions for each employee. You are required to keep these documents for at least three years and make them available for inspection by the Indiana Department of Labor upon request.
Penalties for noncompliance
Failing to comply with Indiana’s wage laws can result in fines, back pay orders, and even potential legal action. If you withhold wages or underpay workers, you may be subject to double the unpaid amount plus attorney fees.
Easy, all-in-one payroll
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— Lisa J. Grissom, Promising Projects
Bottom line: Understanding Indiana’s minimum wage makes good business sense
While these rate remains steady for now, the administrative side of staying compliant is always in motion. Between managing tipped wages, keeping up with training rates for younger staff, and meeting bi-weekly pay requirements, there’s plenty for a business owner to track. By automating these details with OnPay, you can ensure your team is paid accurately, on-time, and that your records are always in order — letting you get back to the work you’re passionate about.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.