© 2025 American Payroll Institute, Inc.
June 30, 2025 Volume 27 Issue 13
State Minimum Wage Changes Effective July 1
Employers in several states need to be aware of state
minimum wage increases taking effect July 1 and the
implications for other areas of payroll.
Alaska, District of Columbia, and Oregon have minimum
wage increases that will take effect July 1 (this updates The
Payroll Source®, §§2.11-1, 2.11-2 Guide to State Payroll Laws,
§1.1 – Minimum Wage Rates and Tip Credit Amounts). Florida
has yearly scheduled increases to its minimum wage through
2026 that take effect on September 30. California also has
statewide health care minimum wage changes that will take
effect on July 1.
DC tip credit increase
Effective July 1, the tip credit in the District of Columbia
will increase to $7.95 per hour from $7.50 per hour (see
The Payroll Source®, §2.11-2). The tip credit had been set to
decrease. However, the Council of the District of Columbia
passed a resolution on June 3 to pause the tip credit decrease.
This will allow the Committee on Business and Economic
Development to assess the impact of two proposals – the
2026 budget proposal and the federal No Tax on Tips Act.
State white collar exemptions
Changes in a state minimum wage rate can impact state
overtime exemption salary thresholds (i.e., ”white collar”
exemptions). In Alaska, the white collar overtime exemption
salary threshold is double the minimum wage for the first 40
hours of work in a week. Effective July 1, the salary threshold
will increase to $1,040 per week from $952.80 per week. In
Oregon, the July 1 minimum wage increase means an increase
in white collar overtime exemption salary thresholds to $652
per week (Portland metro currently $638), $602 per week
(standard currently $588), and $562 per week (nonurban
counties currently $548). Even though these threshold
amounts will continue to be lower than the federal threshold
of $684 per week, remember the state duties’ tests might be
more favorable for some employees. Those employees must
be paid overtime under state law even if they are exempt
from overtime under federal requirements.
Also remember many state minimum wage laws
exempt white collar employees (i.e., administrative,
executive, professional, computer-related, and outside sales
employees) from state overtime requirements but not from
state minimum wage requirements. In those states certain
employees might be exempt from overtime but still must be
paid at least the minimum wage for every hour worked in a
workweek.
State garnishment limit increases
Although many state garnishment laws tie limitations
for the amount that can be garnished from an employee’s
paycheck to the federal minimum wage, some states base
the amount on the state – or even the local – minimum wage
rate.
California’s garnishment limits use the lesser of: (1) 20%
of disposable earnings or (2) 40% of the amount by which
disposable earnings for the week exceed 48 times the higher
of the state or local minimum wage. Health care employers
must apply the higher of the applicable health care minimum
wage or the local minimum wage to determine the limit on
garnishments [California Department of Industrial Relations,
Health Care Worker Minimum Wage Frequently Asked
Questions].
In the District of Columbia, the maximum aggregate
weekly earnings that can be subject to garnishment will be
the lesser of: (1) 25% of weekly disposable earnings or (2) the
amount by which disposable earnings for that week exceed
40 times the D.C. minimum wage ($17.95 effective July 1).
In Oregon, the garnishment limits are the lesser of: (1)
25% of the weekly disposable earnings or (2) the amount
of disposable earnings over a fixed amount weekly ($338
effective July 1). The fixed amount varies for pay periods
other than weekly.
Need state and local payroll compliance help?
Want to learn more about state payroll compliance?
Payroll professionals can boost their career with in-depth
knowledge of state and local payroll laws by attending
PayrollOrg’s State and Local Payroll Certificate Program. The
program will be offered as a 3-day interactive virtual course
on July 30 through August 1, and August 5 through August
7. Attendees can earn up to 18 RCHs, 1.8 CEUs, or 21.5 CPE
credits.
Chart details
The following chart provides state minimum wage
rates and tip credit amounts that will change mid-year. The
changes are effective July 1 unless indicated otherwise.
State Minimum Wage Increases Effective July 1, 2025
State/Territory Minimum Wage
Prior to July 1
Minimum Wage
Eff. July 1, 2025
Tip Credit
Prior to July 1
Tip Credit
Eff. July 1, 2025
Alaska $11.91 $13.00 prohibited
June 30, 2025 Volume 27 Issue 13
State Minimum Wage Changes Effective July 1
Employers in several states need to be aware of state
minimum wage increases taking effect July 1 and the
implications for other areas of payroll.
Alaska, District of Columbia, and Oregon have minimum
wage increases that will take effect July 1 (this updates The
Payroll Source®, §§2.11-1, 2.11-2 Guide to State Payroll Laws,
§1.1 – Minimum Wage Rates and Tip Credit Amounts). Florida
has yearly scheduled increases to its minimum wage through
2026 that take effect on September 30. California also has
statewide health care minimum wage changes that will take
effect on July 1.
DC tip credit increase
Effective July 1, the tip credit in the District of Columbia
will increase to $7.95 per hour from $7.50 per hour (see
The Payroll Source®, §2.11-2). The tip credit had been set to
decrease. However, the Council of the District of Columbia
passed a resolution on June 3 to pause the tip credit decrease.
This will allow the Committee on Business and Economic
Development to assess the impact of two proposals – the
2026 budget proposal and the federal No Tax on Tips Act.
State white collar exemptions
Changes in a state minimum wage rate can impact state
overtime exemption salary thresholds (i.e., ”white collar”
exemptions). In Alaska, the white collar overtime exemption
salary threshold is double the minimum wage for the first 40
hours of work in a week. Effective July 1, the salary threshold
will increase to $1,040 per week from $952.80 per week. In
Oregon, the July 1 minimum wage increase means an increase
in white collar overtime exemption salary thresholds to $652
per week (Portland metro currently $638), $602 per week
(standard currently $588), and $562 per week (nonurban
counties currently $548). Even though these threshold
amounts will continue to be lower than the federal threshold
of $684 per week, remember the state duties’ tests might be
more favorable for some employees. Those employees must
be paid overtime under state law even if they are exempt
from overtime under federal requirements.
Also remember many state minimum wage laws
exempt white collar employees (i.e., administrative,
executive, professional, computer-related, and outside sales
employees) from state overtime requirements but not from
state minimum wage requirements. In those states certain
employees might be exempt from overtime but still must be
paid at least the minimum wage for every hour worked in a
workweek.
State garnishment limit increases
Although many state garnishment laws tie limitations
for the amount that can be garnished from an employee’s
paycheck to the federal minimum wage, some states base
the amount on the state – or even the local – minimum wage
rate.
California’s garnishment limits use the lesser of: (1) 20%
of disposable earnings or (2) 40% of the amount by which
disposable earnings for the week exceed 48 times the higher
of the state or local minimum wage. Health care employers
must apply the higher of the applicable health care minimum
wage or the local minimum wage to determine the limit on
garnishments [California Department of Industrial Relations,
Health Care Worker Minimum Wage Frequently Asked
Questions].
In the District of Columbia, the maximum aggregate
weekly earnings that can be subject to garnishment will be
the lesser of: (1) 25% of weekly disposable earnings or (2) the
amount by which disposable earnings for that week exceed
40 times the D.C. minimum wage ($17.95 effective July 1).
In Oregon, the garnishment limits are the lesser of: (1)
25% of the weekly disposable earnings or (2) the amount
of disposable earnings over a fixed amount weekly ($338
effective July 1). The fixed amount varies for pay periods
other than weekly.
Need state and local payroll compliance help?
Want to learn more about state payroll compliance?
Payroll professionals can boost their career with in-depth
knowledge of state and local payroll laws by attending
PayrollOrg’s State and Local Payroll Certificate Program. The
program will be offered as a 3-day interactive virtual course
on July 30 through August 1, and August 5 through August
7. Attendees can earn up to 18 RCHs, 1.8 CEUs, or 21.5 CPE
credits.
Chart details
The following chart provides state minimum wage
rates and tip credit amounts that will change mid-year. The
changes are effective July 1 unless indicated otherwise.
State Minimum Wage Increases Effective July 1, 2025
State/Territory Minimum Wage
Prior to July 1
Minimum Wage
Eff. July 1, 2025
Tip Credit
Prior to July 1
Tip Credit
Eff. July 1, 2025
Alaska $11.91 $13.00 prohibited
