State by State Minimum Wage Updates in 2025

As we get ready to ring in 2025, many states across the U.S. are preparing to update their minimum wage laws. In fact, 23 states will raise their minimum wages in 2025, ranging from a 25-cent bump in Ohio and Montana to a $2.15 raise in Michigan.

These increases can have significant impacts on both employees and employers, especially for small and growing businesses. Understanding the current minimum wage updates in 2025 is crucial for staying compliant and ensuring fair pay practices.

Understanding Minimum Wage

The U.S. The Department of Labor has a list of current state minimum wages, but it’s also useful to know the increases that are planned for 2025 so that you and your team can be ready for any changes. But first, let’s talk about what the minimum wage really is and why it changes.

Minimum wage is the lowest legal hourly pay for workers. Set by both the federal government and the states, minimum wages aim to protect workers from exploitation and ensure a basic standard of living. The federal minimum wage establishes the baseline, but individual states can also set their own rates, which can be higher than the federal rate.

Federal Minimum Wage

The federal minimum wage remains unchanged at $7.25 per hour in 2025, a rate that has been in place since 2009. However, many states have set their own minimum wages higher than the federal rate to better meet the cost of living in their areas.

States adjust their minimum wage rates to reflect inflation, adapt to cost of living changes, and improve the standard of living for low-income workers. These adjustments are often a response to economic data and policy goals aimed at reducing poverty and income inequality.

State-by-State Minimum Wage Updates

Here is a rundown of some significant state-by-state minimum wage updates for 2025:

California

California continues to lead with one of the highest minimum wages in the nation. As of January 1, 2025, the minimum wage in California is $16.50 per hour. It’s important to note that the minimum wage in California can vary from one city to another. 

New York

In New York, the minimum wage is set to rise to $15.50 per hour statewide. In New York City, Long Island, and Westchester County it will increase to $16.50. 

Florida

Florida's minimum wage is $13 per hour as part of a plan that aims to reach $15 per hour by 2026. This incremental approach helps businesses adjust to wage increases over time.

Washington

Washington State's minimum wage will increase to $16.66 per hour in 2025. This makes it one of the highest in the U.S., reflecting the state's high cost of living, particularly in urban areas like Seattle.

Texas

Texas remains aligned with the federal minimum wage of $7.25 per hour. However, some cities within Texas, like Austin, have implemented higher local minimum wages for city employees and contractors.

Other Notable States

• Massachusetts: The minimum wage is $15 per hour.

• Illinois: The state will see a rise to $15 per hour.

• Ohio: The minimum wage rises to $10.70 per hour, following inflation adjustments. 

• Alaska: An approved ballot measure will bring the minimum wage to $13 per hour by July of 2025, with a plan to reach $15 by 2027. 

Impact on Workers and Businesses

For workers, increased minimum wages can mean more disposable income and an improved quality of life. However, it may also lead to challenges such as reduced hours or job opportunities if businesses struggle to meet the higher wage demands. For employers, it means preparing for these changes by budgeting for increased labor costs. This might involve calculating pay raises, adjusting pricing, reducing workforce hours, or investing in technology to maintain profitability. 

Impact on the Economy 

Minimum wage increases can stimulate the economy by putting more money in the hands of consumers who are likely to spend it. However, the impact can vary. Some argue it might lead to inflationary pressures or job losses in low-margin industries like retail and hospitality. As wages rise, so can the cost of goods and services. It's a delicate balance; wages need to increase enough to help workers without triggering significant inflation that diminishes their purchasing power.

Advocating for Fair Wages

Understanding and adapting to the minimum wage updates in 2025 is essential for workers and businesses alike. As states continue to adjust their minimum wages, staying informed will ensure compliance and help both employers and employees prepare for the changes. By navigating these updates wisely, we can work towards a more equitable and prosperous economy for all.

How Justworks Can Help

Keeping track of changing federal and state laws—like minimum wage increases—isn’t always easy, but it’s key to the success of any small business. 

That’s why Justworks offers intuitive, powerful tools that make it simple to streamline payroll and wage compliance. Our innovative platform is easy to use, and our support team is available 24/7 to help with questions about minimum wage increases—or anything else you need. Get started today to find out how Justworks can help you stay on top of new regulations in 2025 and beyond.