Unlike most other states, Texas does not set a dollar figure as a minimum wage. Instead, the state defers to the federal minimum wage rates.Employers who operate in Texas need to understand the minimum wage law to treat employees fairly and avoid compliance penalties.
What you’ll learn
What you’ll learn
Key takeaways
- The current minimum wage in Texas is $7.25 per hour, as the state adopts the federal rate with no plans for an increase
- Tipped workers must receive a minimum cash wage of $2.13 per hour, but their combined earnings with tips must reach the standard minimum wage rate
- Texas defines a tipped employee as someone who receives more than $20 a month in tips, which differs from the federal standard
- Employers failing to comply with wage laws can be sued for unpaid wages, an equal amount in damages, and the employee’s court and attorney fees
This guide will walk you through everything you need to know about the minimum wage in Texas, including the different wage rates, exceptions, and tips on managing your payroll process.
Current minimum wage rate in Texas
As of 2026, the Texas minimum wage rate is $7.25 per hour. Texas adopts the federal minimum wage rate, which has been $7.25 per hour since July 2009. It’s one of just 18 states that have not set a state-wide minimum wage rate higher than the federal minimum. Instead, Texas simply adopts the federal minimum wage rate. The state minimum wage law doesn’t reference specific dollar minimums.
Under state law, the minimum wage for the state of Texas excludes any employment that is subject to the federal Fair Labor Standards Act (FLSA). In other words, Texas employees who are already guaranteed the federal minimum wage because their jobs are subject to FLSA are not affected by the minimum Texas wage rate.
With some states raising their minimum wage rates recently, some people may have been wondering, “Is the minimum wage now $15 in Texas?” No, the minimum wage in Texas is still $7.25 per hour, and there are no plans currently in place to raise this rate.
Tipped workers in Texas: Rules and employer responsibilities
The federal minimum wage for tipped employees is different from the general minimum wage. Since Texas adopts the federal minimum wage standards, tipped workers in Texas must receive at least the federal tipped minimum wage of $2.13 per hour, also known as the minimum cash wage. In Texas, a tipped employee is any employee who receives more than $20 per month in tips.
Example for review
So, if a waiter in Texas works in a restaurant where they receive $100 per month in tips, on average, their employer could pay them the federal tipped minimum wage of $2.13 per hour.
However, employees receiving the tipped minimum wage must receive enough tips to bring them up to the standard minimum wage rate in Texas when combined with their cash wage. If they don’t earn enough in tips to reach the combined cash and tip minimum wage rate, the employer must provide a tip credit against the minimum wage to meet the required wage total.
Using the waiter as an example again, say they work 160 hours in one month.
- Their employer pays them $2.13 per hour ($340.80 total), and they receive an additional $700 in tips throughout the month.
- Their combined wages of $1,040.80 equal less than $7.25 per hour.
- Their employer must make up the difference with a tip credit of $119.20.
Now, their total earnings, including their cash wage, tips, and tip credit, equal $7.25 per hour for the 160 hours they worked that month.
You can use OnPay’s Texas hourly paycheck calculator to help double-check that your workers get the right take-home pay.
Exemptions and special cases
There are some exceptions to Texas’s minimum wage laws, including:
- Some agricultural workers
- Some student employees
- Employees of some amusement or recreational establishments
- Some handicapped workers
- Employees of some small local newspapers
- Some babysitters or companions for older adults
- Workers employed by certain family members
Carefully review the Texas labor code to determine whether any of your employees are exempt from the state minimum wage rate. When you’re considering employment costs, use a tax rate calculator to determine how much you’ll need to pay in payroll tax for your employees.
Federal versus Texas minimum wage: Understand the connection
Texas does not set its own state minimum wage rate. Instead, Texas state law defers to federal minimum wage standards. However, even though the federal and Texas minimum wage requirements overlap, there are still some differences.
For example, the FLSA defines a tipped worker as someone who typically receives more than $30 per month in tips. Texas’s standard is $20 per month.
Since there are no current plans to increase the federal minimum wage rates, Texas will not raise the minimum wage in 2026. Still, it’s important to stay on top of federal and state payroll updates so you don’t miss any new requirements that apply to your business.
Risks and penalties for noncompliance
Failing to pay your employees the minimum wage to which they are entitled under Texas law can have some less-than-ideal effects for your business.
First, the affected employee or employees can sue your business for the unpaid wages plus an amount equal to the unpaid wages, which serves as damages. It’s extra money to compensate the workers for having to wait for their payment. The employees have two years to bring a lawsuit against your company. If they win, you may also have to pay reasonable attorney’s fees and court costs for the employees you didn’t compensate properly.
Simply put, the penalties for not complying with Texas’s minimum wage law can add up quickly. The better approach for your business is to understand your legal responsibilities as a Texas employer and make every effort to comply with the law.
Affordable and easy
“OnPay has been amazing. It’s an affordable payroll solution that is intuitive to use. The dashboard and flow of payroll are simple and intuitive to utilize.”
— C. Byron Cordes, South Texas Geriatric Care Management, LLC
Best practices for maintaining wage compliance
It’s your responsibility as an employer to comply with applicable federal, state, and local wage laws. Even when you’re trying to follow the rules, though, staying compliant can be tricky. Be careful and apply these compliance best practices.
Carefully track employee hours
To pay employees the wages you owe them under the Texas minimum wage law, you need to know precisely how many hours they work each pay period. Carefully track employee hours and review them for inaccuracies.
Keep detailed records
Make sure you keep detailed, organized records of how much you pay each employee and when. Include overtime payments, deductions, withholdings, and details on how you’re classifying each employee. These records are important for compliance purposes and for your reference. If there’s ever an issue with employee paychecks, you’ll refer back to these records for clarity and evidence.
For withholdings, you can try OnPay’s Texas tax rate calculator to help you get your employee paychecks right.
Update payroll for federal changes
When the law changes, your business may need to adjust its policies and practices to stay compliant. Stay on top of changes in laws that apply to your business. Consult legal advisors or payroll compliance experts if you’re not sure what the law means for you and your employees.
Simplify wage compliance and keep your team paid right
Navigating Texas wage laws, especially when factoring in tip credits and overtime, doesn’t have to be stressful. When you use a modern payroll management platform like OnPay, the heavy lifting is handled for you. Our software automates all the necessary calculations, deductions, and payroll taxes, ensuring your team gets paid correctly every time. Ready to take the stress out of payday? Get started with OnPay today.
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.