Michigan minimum wage 2026: $13.73 rate, tipped wage and the $15 step

The Michigan minimum wage is $13.73 an hour as of January 1, 2026, and it applies to employers with two or more employees aged 16 and older. Tipped employees can receive a cash wage of $5.49 an hour if tips bring them up to $13.73. On January 1, 2027, the full rate becomes $15.00 and the tipped cash wage becomes $6.30. This schedule comes from Senate Bill 8, signed on February 21, 2025, after a Michigan Supreme Court ruling reset the state’s wage and sick leave laws. This guide uses the official figures from the Michigan Department of Labor and Economic Opportunity (LEO) Wage and Hour Division, with worked pay examples and a checklist for employers.

Michigan minimum wage 2026: $13.73 an hour

LEO’s required minimum wage poster (WHD 9904, revised February 2025) lists three steps under the Improved Workforce Opportunity Wage Act (IWOWA). The middle row is the one in effect today.

Who is covered. The IWOWA covers employers who employ two or more employees aged 16 and older. For those employees, the $13.73 Michigan rate replaces the $7.25 federal minimum, because an employer must pay whichever rate is higher. A business with a single employee is outside the state act, but may still owe the federal minimum under the Fair Labor Standards Act (FLSA).

Why the schedule changed. In 2018, the Legislature adopted two citizen ballot initiatives on wages and sick leave and then amended them in the same session, slowing the wage increases. On July 31, 2024, the Michigan Supreme Court ruled in Mothering Justice v. Attorney General that this “adopt and amend” move was unconstitutional and put the original initiatives back in force from February 21, 2025. Lawmakers responded with Senate Bill 8 (Public Act 1 of 2025), which Governor Whitmer signed on February 21, 2025. It set the $12.48, $13.73 and $15.00 steps and slowed the phase-out of the tip credit.

The $15.00 step on January 1, 2027, and inflation after that

The next change is already fixed in law. On January 1, 2027, the Michigan minimum wage becomes $15.00 an hour, the tipped cash wage becomes $6.30 (42%), and the 85% rate for minors becomes $12.75. Tipped employees then need at least $8.70 an hour in tips to reach $15.00.

After 2027, the rate moves with inflation. Under section 4 of the IWOWA (MCL 408.934), as amended by Senate Bill 8:

• Each October, starting in October 2027, the State Treasurer calculates an adjusted minimum wage using the 12-month change in the Consumer Price Index for the Midwest region (CPI-U).
• The adjusted rate takes effect on the following January 1, so the first inflation-based rate applies on January 1, 2028.
• An increase does not take effect if Michigan’s unemployment rate, as determined by the U.S. Bureau of Labor Statistics, was 8.5% or higher for the year before the scheduled increase. That rule has paused raises before: the rate stayed at $9.65 in both 2020 and 2021.

The tipped percentage keeps climbing on its own schedule: 44% in 2028, 46% in 2029, 48% in 2030 and 50% from January 1, 2031. Nobody knows the 2028 dollar figure yet. Expect LEO to announce it in late 2027.

Pay examples at the minimum wage in Michigan

These examples show gross pay before taxes for a non-exempt employee paid only by the hour.

For a full-time employee, the January 2027 step adds $50.80 a week ($1.27 × 40 hours), or $2,641.60 over a year.

Example with overtime. A stock associate in Lansing earns $13.73 an hour and works 44 hours in one workweek. Michigan requires 1.5 times the regular rate for hours over 40, so the overtime rate is $20.595 ($13.73 × 1.5).

1. Regular pay: 40 hours × $13.73 = $549.20.
2. Overtime pay: 4 hours × $20.595 = $82.38.
3. Total for the week: $549.20 + $82.38 = $631.58.

In 2027 the same week pays 40 × $15.00 = $600.00 plus 4 × $22.50 = $90.00, or $690.00. If the employee also earns a bonus or a shift premium, add it to the regular rate before you multiply. Our guide on how to calculate overtime walks through those weeks, and the overtime calculator does the math for you.

Michigan tipped wage and tip credit rules

The Michigan tipped wage is $5.49 an hour in 2026. That is 40% of the $13.73 minimum wage, so the employer’s tip credit is $8.24 an hour. Before the 2025 law, the tipped rate was 38% of the minimum wage, and the original ballot initiative would have phased the tip credit out altogether. Senate Bill 8 kept the tip credit but raises the percentage two points a year until it reaches 50% in 2031.

What this means in practice:

• Tips must close the gap. Cash wage plus tips must equal at least $13.73 for every hour worked. If they fall short, the employer pays the difference. LEO’s poster lists the tips needed as $8.24 an hour in 2026 and $8.70 in 2027.
• The fine is higher for tipped staff. LEO can assess a civil fine of $2,500 against an employer who does not pay minimum wage to tipped employees, compared with $1,000 for other minimum wage or overtime violations.
• Federal rules still apply. The U.S. Department of Labor’s Fact Sheet 15 covers the tip credit notice, tip pools and the ban on managers keeping tips. Give tipped staff an updated written notice each time the cash wage changes.

Example: tip shortfall. A server works 30 hours in a slow week and receives $200.00 in tips. Cash wages are 30 × $5.49 = $164.70. Tips plus wages equal $364.70, but the minimum for the week is 30 × $13.73 = $411.90. The employer owes an extra $47.20 that payday. In a busier week with $300.00 in tips, the total is $464.70 and no top-up is needed.

Overtime for tipped staff is figured on the full minimum wage, not the cash wage. If you schedule servers past 40 hours, confirm the calculation with LEO or your payroll provider.

Minor and training rates

• 85% rate for minors. Employees under 18 may be paid 85% of the minimum wage: $11.67 an hour in 2026 and $12.75 in 2027. You can always pay them the full rate.
• Training wage. A training wage of $4.25 an hour may be paid to employees under 20 for their first 90 calendar days of employment. After day 90, or once the employee turns 20, the regular rules apply.
• Hours limits. Pay is only part of it. Michigan’s Youth Employment Standards Act and federal child labor rules limit the hours and jobs for workers under 18, so check both before you build a schedule around teenagers.

Example. A 17-year-old dishwasher in Grand Rapids works 15 hours a week at the 85% rate: 15 × $11.67 = $175.05. In January 2027 the same hours at $12.75 pay $191.25.

Michigan minimum wage history since 2019

The full rates come from LEO’s published notices and posters. The tipped column is 38% of the full rate through February 2025 and follows the new percentages after that.

The jump from $10.56 to $12.48 in February 2025 was the court-ordered reset. The federal minimum wage has stayed at $7.25 since July 24, 2009. To compare Michigan with its neighbors, see our minimum wage by state guide and the Ohio minimum wage page. For a state still at the federal floor, read our Texas minimum wage guide.

Overtime and exempt employees

• Weekly overtime. Employees covered by the IWOWA must be paid 1.5 times their regular rate for hours over 40 in a workweek. Michigan has no daily overtime rule, so a 10-hour shift inside a 38-hour week owes no overtime.
• Who is exempt. LEO’s poster lists the exemptions: employees exempt from the FLSA minimum wage, professional, administrative and executive employees, elected officials and political appointees, agricultural employees, and employees of amusement or recreational businesses open less than 7 months a year.
• Salary level. Michigan does not set its own salary threshold for exempt staff. The federal salary level the U.S. Department of Labor currently enforces is $684 a week ($35,568 a year), and the duties test matters just as much. Our exempt vs non-exempt guide covers both tests.

Earned sick time in Michigan

The same court ruling revived Michigan’s Earned Sick Time Act (ESTA), and the companion 2025 law (House Bill 4002, Public Act 2 of 2025) amended it. The short version:

• Dates. ESTA took effect on February 21, 2025 for employers with more than 10 employees. Small businesses with 10 or fewer employees were covered from October 1, 2025.
• Accrual. Employees earn 1 hour of paid sick time for every 30 hours worked.
• Annual limits. Larger employers may cap use at 72 hours a year; small businesses may cap it at 40. Employers can frontload the hours at the start of the year instead of tracking accrual.
• New hires. Under the accrual method, an employer may make new employees wait up to 120 days before using sick time, while it keeps accruing.

ESTA has detailed rules on counting employees, carryover, notices and documentation. Check LEO’s ESTA guidance before you change your policy, and see our paid time off guide for how sick time fits with vacation and holidays. A PTO tracker that accrues hours from time clock punches keeps the balances right.

No city minimum wages in Michigan

Michigan cities cannot set their own minimum wage for private employers. The Local Government Labor Regulatory Limitation Act (Public Act 105 of 2015) says a local government shall not adopt, enforce or administer an ordinance, policy or resolution requiring an employer to pay a wage higher than the state minimum wage. It also bars local rules on benefits and on employee schedules.

So a café in Detroit, a store in Ann Arbor and a warehouse in Kalamazoo all start from the same $13.73. If you hold a city or county contract with its own wage terms, ask the agency or your attorney how those terms apply.

What employers should do before January 1, 2027

1. Update rates for the first 2027 pay period. Move every hourly rate below $15.00 up to $15.00, set tipped cash wages to at least $6.30 and minor rates to at least $12.75, starting with hours worked on January 1. A pay period that straddles New Year’s Day needs both rates.
2. Recheck tip shortfalls every workweek. In 2027, tipped staff need $8.70 an hour in tips. Run the check each week and pay any top-up on the regular payday.
3. Reissue tip credit notices. The cash wage and tip credit both change, so give tipped employees a new written notice and keep a signed copy.
4. Swap the posters. Display LEO’s current minimum wage and overtime poster and the ESTA poster, plus the federal FLSA poster from the U.S. Department of Labor.
5. Look at pay compression. A shift lead at $14.75 today will earn less than a new hire in January. Decide on raises before you publish the first January schedule.
6. Budget for 2028. The State Treasurer calculates the 2028 rate in October 2027, and the tipped share rises to 44%. Build both into next year’s labor plan.
7. Keep clean time records. In a wage complaint, accurate hours are your best defense. Our guide to reading a pay stub shows what employees will check.

A shift scheduling tool that shows labor cost per shift makes the higher rate visible before the week starts, and a time clock app gives you punch records you can stand behind if a claim arrives. Employees can file a complaint with LEO’s Wage and Hour Division or go to court, and recovery can include unpaid wages, an equal amount in liquidated damages, costs and attorney fees.

Frequently asked questions