Texas Minimum Wage: What Employers Need to Know

Texas has a reputation for keeping payroll simpler than most states, no state income tax, no separate state wage rate, and fewer layers to navigate than somewhere like California or New York. But simple doesn't mean hands-off. 

The Texas minimum wage is $7.25 per hour in 2026, and while that number is easy to remember, the rules around overtime, tipped employees, worker classifications, and a new federal reporting requirement are where small business owners can get tripped up.

This guide covers the current Texas minimum wage rate, how it applies to different types of workers, how overtime works in Texas, the 2026 updates that matter for employers, and the practical steps to keep your business on the right side of the law.

Texas minimum wage at a glance

The Texas minimum wage 2026 rate is $7.25 per hour, the same as the federal rate, and unchanged since July 24, 2009.

Here's what Texas employers need to know at a glance:

• Standard rate: $7.25/hour, Texas adopts the federal minimum wage, unchanged since July 24, 2009.
• Tipped employees: $2.13/hour cash wage, as long as tips bring the total to at least $7.25.
• Youth/training wage: $4.25/hour for the first 90 days for workers under 20.
• Overtime: 1.5x the regular rate for all hours over 40 in a workweek ($10.88 at minimum wage).
• No local minimums: Texas law bars cities like Houston, Dallas, and Austin from setting a higher rate.

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What is the minimum wage in Texas?

The minimum wage in Texas is $7.25 per hour in 2026, and if you're asking what is minimum wage in Texas right now, that's the same answer it's been since July 24, 2009. Texas does not set its own rate, instead, the Texas Minimum Wage Act (Texas Labor Code, Chapter 62) adopts the federal minimum wage by reference. The rate has not changed since July 24, 2009, and no increase is currently scheduled.

A few things worth knowing about what that rate actually means day-to-day:

• $7.25 x 40 hours = $290 per week, or about $15,080 per year before taxes.
• Texas does not have a separate state minimum wage figure. The Texas state minimum wage matches the federal floor, when the federal rate is $7.25, so is the current minimum wage in Texas.
• Most employees in the state are covered, with some exemptions (covered below).

One thing the old version of this post got wrong: the Texas minimum wage is not tied to the Consumer Price Index or adjusted for inflation. The rate is static. It only changes if Congress raises the federal minimum wage, which it hasn't done since 2009. The Texas Workforce Commission is the state agency that administers and enforces these rules. So if you're wondering whether the Texas minimum wage is going up in 2026, the answer is no.

Texas minimum wage rates by employee type

Most workers in Texas earn the standard $7.25 per hour, but a few categories have different rules. Here's how it breaks down.

Tipped employees and the tip credit

The minimum wage for servers in Texas, and all tipped workers, follows the federal tipped minimum wage, which means employers can pay tipped employees as little as $2.13 per hour in cash wages, as long as the employee earns enough in tips to bring their total up to $7.25 per hour for that workweek.

Here's how the math works:

• Cash wage: $2.13/hour (minimum cash payment from the employer)
• Tip credit: up to $5.12/hour (the portion tips can cover)
• Total required: $7.25/hour, if tips fall short, the employer must make up the difference

One thing worth flagging: Texas defines a tipped employee as someone who regularly earns more than $20 per month in tips. This is different from the federal FLSA threshold of $30 per month. For restaurant owners and bar operators, this distinction matters when you're classifying your team.

Overtime pay, pay periods, and earnings statement requirements all apply to tipped employees the same as anyone else.

Youth and training wage

Employees under 20 years old can be paid $4.25 per hour during their first 90 consecutive calendar days on the job. After those 90 days, the rate reverts to the standard $7.25. This applies regardless of how many hours they work during that period.

Exempt vs. non-exempt employees

Not every employee is entitled to minimum wage and overtime protections. Employees classified as exempt, typically those in executive, administrative, or professional roles, are excluded from FLSA overtime requirements if they pass two tests: the salary test and the duties test.

2026 update: As of May 15, 2026, the federal exempt salary threshold is $684 per week ($35,568 per year). This is the restored 2019 level, after a 2024 DOL attempt to raise it was vacated by Texas federal courts and upheld by the Fifth Circuit. If you adjusted salaries in anticipation of that increase, confirm your classifications are still accurate against the current $684 threshold.

Misclassification, paying someone a salary and calling them "exempt" without checking the duties test, is one of the most commonly enforced FLSA violations in Texas, particularly in food service, retail, and home services. A job title alone doesn't determine exempt status. The work itself has to qualify. You can read more about how the federal overtime salary threshold works and what it means for your team.

How does overtime work in Texas?

Overtime in Texas follows the federal Fair Labor Standards Act: non-exempt employees earn 1.5x their regular rate of pay for every hour worked over 40 in a workweek. What is overtime pay in Texas at the minimum wage? That works out to $10.88 per hour. What is considered overtime in Texas is straightforward, the 40-hour weekly threshold is the only trigger. 

The DOL's FLSA overtime rules set the federal baseline, Texas has no daily overtime requirement on top of that, no double-time rule, and no automatic premium for weekends or holidays, only the 40-hour weekly threshold triggers overtime pay.

A few things that catch Texas employers off guard:

• No daily overtime. Working 10 hours in a single day doesn't trigger overtime in Texas unless the employee crosses 40 total hours that week.
• Regular rate can be broader than base pay. If an employee earns commissions or non-discretionary bonuses, those amounts may factor into their regular rate for overtime calculation purposes.
• You can require overtime. Texas employers can mandate overtime for most roles, and employees can be disciplined or terminated for refusing, as long as they're being compensated correctly. The narrow exception: registered nurses and licensed vocational nurses cannot be required to work mandatory overtime (unscheduled hours beyond what was already on the schedule) under Texas Health and Safety Code §258.003.

Overtime math is where small payroll mistakes turn into real money. Catching it before it happens keeps your labor costs predictable, Homebase can alert you when someone's about to cross 40 hours and calculate the 1.5x rate automatically.

"Making sure my employees are taking breaks, clocking in and out ON TIME... Homebase has saved me money, and time," said Alexandra Ciotti, owner of The Hamlet Diner in Chittenango, NY.

The "no tax on overtime" change Texas employers should know about

Here's the 2026 update that's generating the most questions from small business owners right now, including when does no tax on overtime start in Texas, and that none of the major employer guides are covering yet.

Under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, eligible workers can deduct qualified overtime pay from their federal taxable income. 

The deduction applies to the FLSA "half" premium portion of time-and-a-half, so if your employee earns $10.88 per hour in overtime, the deductible piece is the $3.63 premium above their regular rate. The deduction caps at $12,500 for single filers ($25,000 for joint filers) and phases out at $150,000 MAGI ($300,000 for joint filers). It covers tax years 2025 through 2028.

A few important clarifications for employers:

• It's a deduction employees claim, not a withholding change. Continue withholding as you normally would. The tax benefit shows up on the employee's return.
• Social Security and Medicare still apply. This is a federal income tax deduction only, FICA taxes are unaffected.
• The employer obligation starts with your 2026 W-2s. Beginning with tax year 2026, you're required to separately report qualified overtime compensation on Form W-2, Box 12, using Code TT. The IRS has published guidance on how the no tax on overtime deduction works for employees and employers alike. If your payroll runs on spreadsheets or a system that doesn't separate FLSA overtime from regular pay automatically, this is going to be a problem at year-end.

Separating FLSA overtime from regular pay by hand is exactly the kind of task that invites errors at tax time. With hours and overtime tracked automatically and synced to payroll, Homebase helps you keep those numbers clean for W-2 reporting.

Do Texas cities have their own minimum wage?

No Texas city has its own minimum wage. Texas Labor Code §62.0515 explicitly prevents cities and counties from setting a local minimum above the state (and federal) floor. That means Houston, Dallas, Austin, San Antonio, and El Paso all follow the same minimum wage Texas employers everywhere must pay: $7.25. Local governments can set pay requirements only for their own public employees, not for private employers.

Some employers in tight labor markets do pay above minimum wage voluntarily, not because the law requires it, but because competition for hourly workers in cities like Austin or Dallas makes it necessary to attract and retain good people. That's a business decision, not a legal one.

How to stay compliant with Texas minimum wage and pay laws

The Texas minimum wage rate (minimum wage TX employers must pay) is simple. The compliance work that surrounds it is less so. Here are the key steps every Texas employer with hourly workers should have in place.

1. Confirm your classifications. For every salaried employee, verify they meet both the salary test ($684/week as of 2026) and the relevant duties test. Don't rely on job titles. Run through the FLSA's three-part test for executive, administrative, and professional exemptions. Misclassification is expensive, back wages plus equal liquidated damages, plus attorney's fees.

2. Set a compliant pay schedule. The Texas Payday Law (Texas Labor Code, Chapter 61) requires that non-exempt employees be paid at least twice a month, with semi-monthly pay periods as equal in length as practicable. Exempt employees must be paid at least once a month. Final paychecks are due on the employee's next regular payday, there's no immediate-payment requirement in Texas, unlike California.

3. Track hours with defensible records. FLSA recordkeeping requires you to retain wage and hour records and provide each employee with a written earnings statement showing hours, rate, and deductions. Starting with tax year 2026, those records also need to cleanly separate FLSA overtime from other pay for W-2 reporting. Manual time cards or shared spreadsheets make that separation very difficult.

4. Post the federal labor law poster. Texas does not have a separate state minimum-wage poster, because the state adopts the federal rate. Post the federal minimum wage poster in a conspicuous location accessible to all employees. Replace it any time the federal rate changes.

Paying your team right with Homebase

The Texas minimum wage is $7.25 and it isn't going anywhere soon, there's no state increase planned, and the Texas minimum wage rate won't change unless Congress moves the federal floor. But the rules that surround it, overtime calculations, employee classification, tipped pay, pay frequency, and the new OBBBA W-2 reporting requirement, are where small businesses take on real compliance risk.

Keeping pay, overtime, and records straight across a busy week is a lot to hold in your head. Homebase brings time tracking and payroll together so your hours flow into payroll, your records stay audit-ready, and your team gets paid right every time.

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Frequently asked questions about minimum wage in Texas

What is the minimum wage in Texas in 2026? 

The minimum wage in Texas is $7.25 per hour in 2026, matching the federal rate. Texas adopts the federal minimum wage under the Texas Minimum Wage Act and does not set its own rate. No increase is currently scheduled.

What is the tipped minimum wage in Texas? 

The tipped minimum wage in Texas is $2.13 per hour in cash wages, with tips expected to bring the total to at least $7.25 per hour. Texas defines a tipped employee as someone earning more than $20 per month in tips, a lower threshold than the federal standard of $30 per month.

What is overtime pay in Texas, and how much is it? 

Overtime pay in Texas is 1.5x the employee's regular rate of pay for all hours worked over 40 in a workweek, so how much is overtime pay in Texas at minimum wage? $10.88 per hour. Texas has no daily overtime requirement, only weekly hours beyond 40 count.

Is the Texas minimum wage going up? 

The Texas minimum wage is not going up in 2026. The rate is tied to the federal floor and has remained at $7.25 since 2009. Texas does not index the rate to inflation or the Consumer Price Index, and no legislation is currently pending to raise it.

Can Texas employers require mandatory overtime? 

Employers in Texas can require overtime for most non-exempt employees, provided they receive 1.5x pay for hours over 40 in the workweek. The narrow exception covers registered nurses and licensed vocational nurses, who cannot be required to work mandatory overtime, meaning unscheduled hours beyond what is already scheduled, under Texas Health and Safety Code §258.003.