Michigan’s minimum wage increased from $12.48 per hour to $13.73 per hour on January 1, 2026. It will increase to $15 per hour in 2027. If you own or operate a business in the Great Lakes State (or are just opening the doors), understanding the state’s minimum wage law and scheduled increases makes good business sense.
What you’ll learn
What you’ll learn
Key takeaways
- The minimum hourly wage in Michigan increased from $12.48 to $13.73 per hour on January 1, 2026
- In addition, the tipped employee rate of hourly pay increased to $5.49 per hour, 40% of the minimum wage, as long as the employee receives at least $8.24 in tips, bringing the total to $13.73 per hour
- After January 1, 2027, when the state’s minimum wage is scheduled to increase to $15 per hour, all updates will be based on inflation
- Businesses in Michigan are responsible for understanding and complying with minimum wage and overtime requirements
In this guide, we’ll cover Michigan’s current and tipped rates, scheduled increases, youth and training wages, overtime considerations, and payroll compliance tips.
Current Michigan minimum wage rates
The minimum hourly wage in Michigan increased from $12.48 per hour to $13.73 per hour on January 1, 2026. It is scheduled to rise to $15 per hour on January 1, 2027. Your business must accurately implement these updates in your payroll by the applicable date to remain compliant and to avoid fines and penalties.
Tipped employee rates
On January 1, 2026, the tipped employee rate in the state of Michigan increased to $5.49 per hour, which is 40% of the state’s minimum wage, provided the employee earns at least $8.24 per hour in tips. If an employee’s tips and wages don’t add up to the full $13.73 minimum wage, then your business must cover the difference.
Youth and training wages
Your business can pay a training wage of $4.25 per hour to newly hired employees under the age of 20 for their first 90 calendar days of employment. This rate did not change in 2026. You can pay minors ages 16 and 17 a rate of $11.67 per hour. This increased from the previous year’s rate of $10.61 per hour.
Scheduled increases and projections
Here are the scheduled minimum wage increases set to take place in Michigan in the near future:
- The minimum wage in Michigan will increase to $15 per hour on January 1, 2027, as set by Michigan’s Improved Workforce Opportunity Wage Act. The Michigan legislature enacted the act and established the annual schedule of increases in the minimum wage.
- After the $15 rate takes effect, future annual adjustments will be tied to the rate of inflation.
- In 2027, the tipped employee wage is set to tick up to $6.30 per hour, while the rate for minor workers will be $12.75 per hour.
OnPay’s Michigan hourly paycheck calculator can help you accurately calculate your workers’ net pay and tax withholdings.
Applying rates in payroll
Minimum hourly wage rate changes in payroll must be applied to the pay date, not the hire date. Your business is responsible for maintaining accurate, timely payroll that reflects any updates to Michigan’s minimum wage rate.
While the federal minimum wage remains $7.25 per hour, your business must comply with the higher state minimum wage. This includes rules for overtime pay for hours worked above and beyond 40 in a given workweek. The US Department of Labor’s Fair Labor Standards Act was designed to establish minimum wage, overtime pay, recordkeeping, and youth employment standards, which must be adhered to.
Automated payroll systems can automatically apply updates based on date and amount to make sure your payroll is always accurate. These systems can eliminate the guesswork and errors from payroll processing.
Legislative updates affecting minimum wage
The Improved Workforce Opportunity Wage Act was enacted to update Michigan’s minimum wage standards and prevent wage discrimination. After the state minimum wage rate reaches $15 in 2027, all updates are scheduled to be based on inflation.
| Category | 2026 rate | 2027 projection |
| Standard minimum wage | $13.73 | $15.00 |
| Tipped employee rate | $5.49 | $6.30 |
| Minors (ages 16-17) | $11.67 | $12.75 |
| Training wage (under 20) | $4.25 | $4.25 |
Common employer considerations
As a business owner or operator in Michigan, there are several things to keep in mind when it comes to the minimum wage and payroll. Here are some tips for staying ahead of the game:
- Payroll tracking is essential: Your payroll must be complete, and it must implement any updates on the immediate date they take effect. If January 1 falls in the middle of your payroll cycle, for instance, your business is responsible for paying the new, higher minimum wage for any days on or after January 1.
- Make sure your tipped wages are correct: In essence, tipped wages are used to bring tipped employees up to the minimum wage or higher. As of January 1, 2026, that means paying at least $5.49 per hour and making sure that every tipped employee earns at least $13.73 per hour. In 2027, these figures will increase to $6.30 and $15 per hour, respectively. A tax rate calculator can also make payroll and tax computations easier.
- Comply with youth wage laws: When your younger workers turn 18, they are due a higher minimum wage. Make sure your payroll accurately tracks ages and wages to remain compliant.
- Track both federal and state payroll updates: You are responsible for knowing when federal, state, and local laws change and implementing those changes in a timely manner.
- Avoid miscalculations with automated payroll software: Manual payroll can lead to errors and discrepancies. Automated payroll software ensures that every “i” is dotted and every “t” is crossed, so your payroll is always accurate and on time.
- Keep employees informed: Payroll changes should never come as a surprise to your team members. Keep them apprised of any upcoming payroll and HR process updates.
Intuitive and dependable
“OnPay is inexpensive, dependable, and has all the features you need. The intuitive interface and responsive support mean I get payroll done as quickly as possible. They handle the difficult things like filing taxes and executing direct deposits that would otherwise take a lot of time. Moving from ADP to OnPay has been an excellent decision.”
— Daniel Johnston, Allegheney Yukon Partners, LLC
If you have more questions about compliance with local labor laws, consider consulting a business attorney or working with your human resources department on a plan to keep track of the rules you need to be aware of.
Managing Michigan payroll with confidence
With Michigan’s minimum wage steadily climbing toward $15 per hour by 2027, staying compliant requires keeping a close eye on your payroll. Between calculating the $5.49 tipped minimum wage, tracking when youth workers age into higher brackets, and ensuring scheduled increases hit the exact right pay date, there’s a lot for employers to manage.
Getting these details right shouldn’t mean spending your evenings buried in spreadsheets or worrying about miscalculations. A dependable payroll software makes tracking hours, covering tip makeups, and automatically rolling out scheduled wage updates. If you’re ready to take those tasks off your plate so you can focus on growing your team, OnPay is here to help.
Take a tour to see how easy payroll can be.
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.