Minnesota’s state minimum wage increased to $11.41 per hour on January 1, 2026, following its annual adjustment for inflation. But between shifting statewide thresholds and local ordinances in Minneapolis and St. Paul, keeping payroll accurate means paying close attention to every location where your team works.
What you’ll learn
What you’ll learn
Key takeaways
- The Minnesota state minimum wage is $11.41 for most businesses but there are some exceptions for youth and trainees, as well as the twin cities of Minneapolis and St. Paul
- Minimum wage incremental increases in Minnesota are indexed to inflation, and they update annually on January 1
- Businesses are responsible for following state minimum wages and making sure workers are paid in a timely and accurate manner
- You are also responsible for paying overtime for every hour worked above and beyond 40 hours in a given work week
In this guide, we will break down the state’s local variations, youth training rates, and practical compliance steps to keep your small business running smoothly.
Minnesota’s statewide minimum wage rates
As of January 1, 2026, the current minimum wage in Minnesota is $11.41 per hour, an increase from $11.13 per hour in 2025. Youth and training wages for workers under age 20 are $9.31 per hour for the first 90 days of employment. While the state previously had two tiers of minimum wages based on an employer’s revenue, the state minimum wage now applies to all businesses, with a few exceptions.
In addition, tipped employees in Minnesota must be paid at least the minimum wage per hour, plus the tips that they earn. Businesses cannot take a tip credit against minimum wages in Minnesota.
Minnesota’s minimum wage of $11.41 per hour is significantly higher than the federal minimum wage of $7.25 per hour. A living wage in the state is $23.31 for one working adult with no kids and $31.62 for two working adults with two kids.
Employer classifications and revenue thresholds
Previously, Minnesota had employer classifications and revenue thresholds for small employers and large employers that determined the minimum wage. However, the Minnesota legislature updated state minimum wage law and established a single minimum wage for all businesses starting in 2025.
The Minnesota Department of Labor and Industry shares ongoing updates on state minimum wage rates and regulations on its website.
Local minimum wage variations
There are some notable variances in city minimum wage requirements, including the following.
- The minimum wage in Minneapolis is $16.37 per hour as of January 1, 2026. This applies to all employers and employees in the city, regardless of business size or worker age.
- Through June 30, 2026, the minimum wage in St. Paul is $15 per hour for small businesses of six to 100 employees and $13.25 per hour for micro businesses (these are companies with five workers or fewer).
- The minimum wage in St. Paul is $16.37 per hour for macro or large businesses with 101 or more employees as of January 1, 2026. It will increase to this same rate for small businesses on July 1, 2026 (with a rate of $14.25 per hour for micro businesses with five or fewer employees).
If you operate across city lines, you’re responsible for complying with minimum wage ordinances in every city where you do business. This might mean offering different rates of pay for employees who work just a few miles away from each other if your organization hosts multiple locations. Automated payroll software can help your company organize and streamline the entire payroll process to prevent errors and issues.
Annual increases and inflation adjustments
Minnesota updates its statewide minimum wage rates annually on January 1, based on inflation. While the state’s official rates for 2027 will be announced later this year, some local city timelines are already locked into place.
For example, following the mid-year changes in 2026, St. Paul’s required rate for micro businesses with five or fewer employees is scheduled to stay the same at $14.25 per hour as of January 1, 2027.
Using a tax rate calculator can make it much easier to stay ahead of these shifting numbers no matter where your team performs work.
For companies in the small to large company size range, rates for 2027 will be announced on September 1, 2026. When the numbers are announced, we’ll add them here.
Applying rates in payroll systems
It is essential to pay your Minnesota employees accurately, including city-specific rates and youth and training wages. Your automated payroll system can incorporate multiple rates and timelines to make sure you get payroll right every time, and on time. You can also try OnPay’s Minnesota hourly paycheck calculator, which to run payroll calculations for your team.
Interaction with federal overtime rules
While Minnesota’s higher minimum wage supersedes the federal minimum wage for businesses in Minnesota, the Wages and Fair Labor Standards Act requires all businesses nationwide to pay 1.5 times the minimum wage or the applicable rate for any hours worked beyond 40 in a given workweek.
In a nutshell, your business is required to follow the standards that provide the most favorable pay for your team members. Clearly, Minnesota’s minimum wage is significantly higher than the federal minimum wage.
Common compliance considerations
Your business must carefully track each employee’s specific work location to apply the correct local minimum wage, overtime, and taxes for payroll.
Here are some tips to help your Minnesota business get compliance right:
- Maintain thorough records of employee work location so you can easily track hours by specific wage rates.
- Always apply the highest applicable minimum wage rate where the employee performs work. For instance, a city’s higher minimum wage will override the state or federal rate.
- Your business should also withhold taxes based on where an employee works, not where they live.
- You can turn to automated payroll systems that can readily handle multi-location calculations and filings to prevent errors and penalties.
- Make sure your business takes the time to conduct regular audits that look for issues or discrepancies.
- Finally, make sure your organization communicates any changes or updates to your team members, so they know what to expect on payday.
Seamless pay runs
“OnPay makes running payroll easy and fast. It allows us to share information with our employees and enter it into our bookkeeping software with just a few clicks. The interface is user-friendly, and modifications are easy to make.”
— Leah Ashley, Copper Leaf Creative
It also helps to stay up to date on changes in local laws or legislation that could affect wage rates. All of this will help your business maintain accurate payroll and compliance.
Bottom line: Staying ahead of Minnesota’s wage laws pays off
While the Minnesota minimum wage recently increased to $11.41 per hour, staying compliant requires more than just tracking the statewide rate. Because minimum wages in Minnesota are indexed to inflation annually and cities like Minneapolis and St. Paul enforce their own higher local rates, obligations can shift depending on where your team works.
Staying compliant means maintaining thorough records of employee work locations and always paying the highest applicable rate. By using an automated payroll system like OnPay to handle multi-location calculations and filings, you can prevent costly errors and penalties, ensuring your team is paid accurately everywhere you do business.
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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.