Indiana minimum wage in 2026 (and 2027)

Who Indiana's $7.25 covers

The Indiana statute kicks in at two employees. A sole worker at a tiny shop is outside it, though federal law usually picks that person up anyway, since the Fair Labor Standards Act reaches large enterprises and any worker whose job crosses state lines. The federal minimum wage page explains those coverage tests.

Restaurants, bars and salons may use the federal tip credit. Pay at least $2.13 in cash, credit up to $5.12 from tips, and only for staff who regularly earn over $30 a month in tips. Whenever tips run short in a workweek, the employer covers the gap to $7.25. A new hire under age 20 can start at $4.25 for 90 days under federal rules.

Overtime under Indiana law is time and a half after 40 hours in the workweek, which at the minimum works out to $10.875 an hour.

Indiana minimum pay in weekly, monthly and yearly terms

Take a standard full-time year of 2,080 hours. At $7.25 that comes to $15,080.00 of gross pay, or $1,256.67 if you split it across 12 months and $290.00 for one 40-hour week.

Tipped roles look very different on the employer's books. Paying $2.13 for 2,080 hours means $4,430.40 of direct cash wages for the year, and the server's tips must make up the other $10,649.60 of the $15,080 floor. Track tips every pay period so you catch a shortfall before payday rather than at year end; our restaurant payroll guide covers tip reporting tools.

The employer cost of one Indiana minimum wage worker

Taxes add $1,433.12, about 9.5% over gross pay. Because Indiana taxes only the first $9,500 of each worker's pay for unemployment, that $237.50 line is identical for a $7.25 cashier and a $20 supervisor. Indiana county income taxes are withheld from the worker's check by county of residence on January 1, so they cost you setup time rather than money; rates are on the Indiana county tax page. The employee cost calculator prices other wages.

Changes so far and what 2027 looks like

Indiana's rate sat at $7.25 in each DOL history table from 2020 to 2024, footnoted to employers of two or more, and it has not moved in 2026. As of October 2026 no bill or schedule sets a 2027 figure.

Hoosier employers near a border feel the gap. Illinois requires $15.00 at 4 or more employees, Michigan's $13.73 becomes $15.00 on January 1, 2027, and Ohio moves from $11.00 to $11.40 for its larger employers. Send a crew to a job in Illinois or Ohio and those hours fall under that state's wage law, since pay follows the work site. Chicago also sets its own city rate, which we could not confirm for 2026 on the city's page. All 50 states sit in our state minimum wage table.

Paying Indiana minimum wage staff without errors

Base-rate mistakes are rare; overtime and tip top-up misses are not. Software that totals hours and tips per workweek prevents both. Gusto lists its Simple plan at $49 per month and $6 per worker (pricing page, October 16, 2026), so a five-person hourly crew runs $79 monthly before add-ons. Weigh it against cheaper and fuller tools in our scored payroll software list, and see Indiana payroll taxes for registration and final pay rules.