Texas minimum wage in 2026: $7.25 an hour

How Texas sets its minimum wage

Texas does not vote on a number. Chapter 62 of the Labor Code points to the federal minimum wage, so when the federal rate moves, the Texas rate moves with it. The federal rate last rose on July 24, 2009, which is why the answer to "Texas minimum wage 2025" and "Texas minimum wage 2026" is the same $7.25.

Two laws sit side by side. The Department of Labor's state table notes that the Texas law "excludes from coverage any employment that is subject to the federal Fair Labor Standards Act." Businesses covered by the federal law follow FLSA rules on pay, tips and overtime. The state act catches workers the federal law misses and applies the same $7.25 floor to them.

Houston, Dallas, Austin and El Paso: why there is no city rate

Texas law blocks local minimum wages for private employers. Section 62.0515 of the Labor Code says the state minimum wage "supersedes a wage established in an ordinance, order, or charter provision governing wages in private employment, other than wages under a public contract." So the minimum wage in Houston, Dallas, San Antonio, Austin, Fort Worth and El Paso is $7.25 for any business in the private sector.

The carve-outs are narrow. A city can set pay for its own staff, and it can require a higher wage in a public contract it signs with a private company. The section also does not apply to state or federal job training programs. Bills that would change this section are filed from time to time, such as House Bill 193 in 2023, whose text we cite. As of October 2026 no Texas city has a private-sector minimum wage, but watch the Legislature if you plan multi-year budgets.

Compare that with states like California, where the City of Los Angeles pays $18.42, or Washington, where Seattle pays $21.30. A Texas employer never has to track a city wage schedule.

Servers and bartenders: the $2.13 cash wage

Tipped workers in Texas can be paid a cash wage of $2.13 an hour, with up to $5.12 an hour of their tips counted toward the $7.25 minimum. The Texas Workforce Commission's employer guidebook sets out the conditions under the FLSA tip credit rules:

• The worker must customarily receive more than $30 a month in tips to count as a tipped employee.
• You must tell the worker, before taking the credit, the cash wage, the credit amount, that the credit cannot exceed tips actually received, and that tips belong to the worker except for a valid tip pool.
• If cash wage plus tips falls short of $7.25 for any workweek, you pay the difference.

A worked example: a server works 30 hours in a week. Cash wages are $63.90 ($2.13 x 30). The minimum for those hours is $217.50 ($7.25 x 30), so tips must be at least $153.60. If the server took in $120 in tips that week, you owe another $33.60. Our restaurant payroll comparison covers payroll tools for businesses with tipped staff.

Who can be paid less, and who is exempt

For employers covered by the FLSA, the federal exemptions are the ones that matter:

• Salaried white-collar staff. Executive, administrative and professional employees who pass the duties tests and earn at least $684 a week ($35,568 a year) are exempt from minimum wage and overtime.
• Workers under 20. A youth wage of $4.25 an hour is allowed for the first 90 consecutive calendar days of employment.
• Tipped employees. The $2.13 cash wage covered in the section before this one.

Workers outside the FLSA fall under the Texas act, which lists its own exemptions in Subchapter D of Chapter 62. Read that subchapter, or ask the Texas Workforce Commission, before you treat anyone as exempt on state grounds alone.

Overtime rules for Texas employers

Texas has no overtime law of its own, and the Department of Labor's state table lists no premium pay rule for Texas. Federal law applies: one and a half times the regular rate for hours over 40 in a workweek. There is no daily overtime, so a 12-hour shift inside a 40-hour week is paid at the straight rate.

At minimum wage, each overtime hour costs $10.88 ($7.25 x 1.5 = $10.875). A 50-hour week therefore pays $398.75: $290.00 for the first 40 hours plus $108.75 for the 10 extra hours. For a tipped worker, the $5.12 credit stays the same on overtime hours, so the cash wage for an overtime hour is $5.76 ($10.875 minus $5.12 is $5.755, rounded up to the cent).

What $7.25 works out to per week, month and year

Those are gross figures. Texas has no state income tax, so the only withholding from a minimum wage paycheck is federal: Social Security, Medicare and any federal income tax the worker's W-4 calls for.

What a $7.25 employee costs a Texas employer

The wage is only part of the bill. For a new Texas employer paying one full-time worker $7.25 an hour, the first-year employer taxes look like this:

Three things change the total. After your first years, the Texas Workforce Commission assigns an experience rate between 0.32% and 6.32% on the same $9,000, so the $243 can fall to $28.80 or rise to $568.80. Our research did not confirm whether the published 2.7% already includes smaller components such as the Employment and Training Investment Assessment, so check your rate notice. Workers comp is not in the table because Texas lets most private employers opt out, but a non-subscriber must notify the state through the Division of Workers' Compensation and report qualifying injuries. The Texas payroll tax guide covers that trade-off, and the employee cost calculator runs the same math for any wage.

Paying minimum wage staff in Texas

Texas pay rules are simple but strict on timing. Non-exempt workers must be paid at least twice a month. A fired or laid-off worker gets a final check within 6 calendar days, and a worker who quits is paid by the next regular payday. New hires are reported to the state within 20 days.

Payroll software can run the overtime math and the federal tax deposits for a monthly fee. Gusto's Simple plan costs $49 a month plus $6 per person for single-state payroll (checked October 16, 2026), so a five-person Texas crew runs $79 a month. Weigh it against other providers in our payroll software rankings, or see what payroll services cost at 5, 10 and 25 employees.

If you would rather hand off HR as well, a PEO must hold a Texas license from the Department of Licensing and Regulation. Our Texas PEO guide lists what that adds to the cost.