Minimum Wage in Texas

What’s the Minimum Wage in Texas?

Figuring out the minimum wage is often the first step for anyone starting a new job in Texas. Whether someone’s entering the workforce or relocating from another state, knowing what to expect can help with budgeting and planning ahead. Texas follows federal minimum wage rules under the Fair Labor Standards Act (FLSA), and state law preempts local ordinances, so all employers in Texas must observe the same rate. Understanding the state’s minimum wage isn’t just important for workers. Employers and business owners also need to stay up to date to remain compliant and competitive. With the cost of living always changing, it’s smart to keep an eye on how Texas stacks up against national standards.

Texas Minimum Wage: Current Rate and History

Texas’s minimum wage matches the federal minimum wage of $7.25 per hour, unchanged since July 24, 2009. The Texas Minimum Wage Act incorporates FLSA requirements into state law (Texas Labor Code § 62.051) so that any federal increase automatically applies in Texas unless the Legislature acts otherwise. State law does not empower cities or counties to set higher local minimum wages; attempts to pass municipal wage ordinances in Houston, Dallas, San Antonio, and Austin have been invalidated under state preemption statutes enacted in 2003 and reinforced by HB 2127 in 2023.

Prior to 2009, Texas minimum wage changes mirrored adjustments in the federal rate set by Congress; the state never enacted stand-alone wage increases. Since the last federal increase in 2009, the rate has remained at $7.25, even as national discussions about a $15 minimum wage have persisted.

Tipped Employees

Under FLSA, Texas employers may take a tip credit of up to $5.12 per hour, allowing a cash wage of $2.13 per hour for employees who regularly receive tips, provided that total earnings (wages plus tips) equal at least $7.25 per hour. Employers must make up any shortfall if total tips plus cash wages do not reach the federal minimum.

Sub-Minimum Rates and Exemptions

Certain worker categories may be paid below $7.25 under federal exemptions adopted by Texas law:

• Youth trainees under 20 years old may be paid $4.25 per hour for the first 90 days of employment.
• Full-time students employed in retail or service establishments covered by FLSA may receive the training wage.
• Workers with disabilities under a 14(c) certificate may be paid based on productivity standards.
• Small agricultural employers using fewer than 500 “man-days” of agricultural labor in a calendar quarter may be exempt from FLSA coverage, though larger farms must pay $7.25.

State‐by‐State Minimum Wage Comparison

Different states set their own minimum wages, often above the federal $7.25 rate. As of 2025, 30 states plus Washington, D.C., enforce higher rates. High-rate states include:

• California: $16.00 (no tip credit)
• Washington: $16.28 (tied to inflation)
• Oregon: $14.75–$15.75 (varies by region)
• New York: $15.00+ (varies by region)
• Florida: $12.00 (scheduled to reach $15.00 by 2026)

In contrast, Texas, along with Georgia, Louisiana, and Alabama, adheres to the federal $7.25 rate and a $2.13 tipped minimum. Local wage variations in states like New York, Massachusetts, San Francisco, and Seattle illustrate how city ordinances can exceed state floors—an option Texas law expressly prohibits.

State statutes impact payroll record-keeping, mandatory poster requirements, wage claim processes, and audit procedures. Texas employers must follow the federal rate unless Congress raises the FLSA floor.

Economic Impact on Workers and Businesses

According to the Bureau of Labor Statistics, 141,000 workers nationwide earned exactly the federal minimum wage of $7.25 in 2022; specific Texas figures are unavailable but reflect a subset of this national total. Minimum-wage earners in Texas often struggle to cover basic living costs, as the state minimum falls well below estimated living wages in major metro areas.

The MIT Living Wage Calculator estimates a San Antonio–New Braunfels living wage of $21.14 per hour for a single adult. In Dallas–Fort Worth, the living wage is $24.17, and in Austin–Round Rock, $23.05, highlighting a stark gap between statutory and necessary living wages.

Businesses employing many minimum-wage workers—such as retail, hospitality, and food service—rely on precise payroll systems and compliance safeguards to avoid wage-claim litigation and liquidated-damages penalties under both state and federal law. Failure to pay proper wages can trigger investigations by the Texas Workforce Commission and the U.S. Department of Labor, resulting in back-wage awards and fines.

Exemptions, Regional Variations, and Employer Compliance

Texas law specifies these exemptions and compliance measures:

• Agricultural workers on large operations must receive the federal minimum; very small employers may be exempt.
• Student and trainee exemptions apply under federal guidelines for specific industries.
• Close-family employment of minors may be exempt under narrow conditions.
• Employers must post federal and state labor-law posters in conspicuous workplace locations.
• Accurate gross-wage and payroll records are required for each pay period.
• Tipped employees’ wage calculations must ensure tips plus cash wages equal at least $7.25 per hour.

Violation consequences include wage-claim hearings, wage audits, back-pay awards, liquidated damages, and potential civil penalties for repeat offenders under federal and state statutes.

The Debate and Future Outlook for the Texas Minimum Wage

Policymakers and advocacy groups continue to debate raising Texas’s minimum wage, citing cost-of-living increases and poverty-reduction goals. Bills introduced in recent legislative sessions aimed to raise the state floor or index it to inflation, but none advanced to final passage. Local living-wage campaigns in Austin and San Antonio confront state preemption barriers.

Business groups contend that significant wage hikes could raise operational costs, especially in low-margin sectors, and argue Texas’s relatively low cost of living offsets the need for higher statutory wages. Economic researchers have documented wage stagnation’s effects on recruitment and retention, though specific studies linking Texas wages to turnover remain limited.

Advocates point to the disparity between $7.25 and living-wage benchmarks as justification for state action, noting potential reductions in public-assistance dependency and wage-theft claims. Future proposals could include automatic inflation indexing, changes to trainee or tip-credit rules, or sector-specific wage floors. Until federal or state legislation changes, Texas’s minimum wage will remain at $7.25 per hour.

Employees and employers should monitor:

• Federal FLSA developments and any Congressional minimum-wage legislation.
• Texas legislative sessions for amendments to the Texas Minimum Wage Act.
• Living-wage advocacy and legal challenges to preemption statutes.

Staying informed ensures that workers receive fair pay and businesses maintain compliance in the evolving landscape of U.S. wage policy.