2016 Federal and State Minimum Wages

2016 Federal and State Minimum Wage

The table below reflects the 2016 state minimum wages, state tipped credit and wage base in effect as of January 1, 2016.

State Rate Tipped Cost Wage Base
FEDERAL $7.25 $5.12 $7,000
Alabama $7.25 $5.12 $8,000
Alaska $9.75 N/A $39,700
Arizona $8.05 $3.00 $7,000
Arkansas $8.00 $5.37 $12,000
California $10.00 N/A $7,000
Colorado1 $8.31 $3.02 $12,200
Connecticut $9.60 $3.53 $15,000
Delaware $8.25 $6.02 $18,500
Dist. of Columbia2 $11.50 $8.73 $9,000
Florida $8.05 3.02 $7,000
Georgia3 $7.25 N/A $9,500
Hawaii $8.50 $0.75 $42,200
Idaho $7.25 $3.90 $37,200
Illinois $8.25 $3.30 $12,960
Indiana $7.25 $5.12 $9,500
Iowa $7.25 $2.90 $28,300
Kansas $7.25 $5.12 $14,000
Kentucky $7.25 $5.12 $10,200
Louisiana $7.25 $5.12 $7,700
Maine4 $7.50 $3.75 $12,000
Maryland2 $8.75 $5.12 $8,500
Massachusetts $10.00 $6.65 $15,000
Michigan $8.50 $5.27 $9,000; $9,500
Minnesota5 $9.50 N/A $31,000
Mississippi $7.25 $5.12 $14,000
Missouri $7.65 $3.82 $13,000
Montana $8.05 N/A $30,500
Nebraska $9.00 $6.87 $9,000
Nevada $8.25 N/A $28,200
New Hampshire $7.25 $3.99 $14,000
New Jersey $8.38 $6.25 $32,600
New Mexico $7.50 $5.37 $24,100
New York $9.00 $1.50 $10,700
North Carolina $7.25 $5.12 $22,300
North Dakota $7.25 $2.39 $37,200
Ohio $8.10 $4.05 $9,000
Oklahoma $7.25 $3.62 $17,500
Oregon $9.25 N/A $36,900
Pennsylvania $7.25 $4.42 $9,500
Rhode Island $9.60 $6.11 $22,000; $23,500
South Carolina $7.25 $5.12 $14,000
South Dakota $8.55 $4.25 $15,000
Tennessee $7.25 $5.12 $9,000
Texas $7.25 $5.12 $9,000
Utah $7.25 $5.12 $32,200
Vermont $9.60 $4.80 $16,800
Virginia $7.25 $5.12 $8,000
Washington $9.47 N/A $44,000
West Virginia $8.75 $6.13 $12,000
Wisconsin $7.25 $4.92 $14,000
Wyoming $7.25 $3.02 $25,500

1. Proposed
2. Effective 7/1/2016
3. GA sometimes applies federal minimum wage
4. Portland, Maine has increased local minimum wage of $10.10
5. Effective 8/1/2016

 

Tip Credit: The Department of Labor permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage. Thus, the maximum tip credit that an employer can currently claim is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).1

 

Wage Base: Definition

Taxable Wage Base: The Taxable Wage Base is the maximum amount of earned income upon which employees must pay Social Security taxes. This is also known as the Social Security Wage Base. More often than not, the employee’s gross wages will be equal to the taxable wage base. Typically, an employee’s employer will handle the calculation and withhold the correct amount of taxes from each paycheck, but it is the employees’ responsibility to report the tax.3

 

2016 Notable Changes in Minimum Wage

  • At the beginning of the New Year, 14 states went forward with higher minimum wages. Out of those 14 states, 12 increased their rates through legislation passed in the 2014 or 2015 sessions. The other two states automatically increased their rates based on the cost of living.2
  • Eight out of the 11 states that currently tie increases to the cost of living did not increase their minimum wage rates for 2016. Colorado and South Dakota provided increases to the minimum wage rates. Colorado provided for an eight-cent increase and South Dakota for a five-cent increase per hour.2
  • Nevada will announce in July whether or not they will have a cost of living increase to their indexed minimum wage.2
  • Maryland, Minnesota and D.C. have additional increases scheduled for a later time in 2016.2

 

Keeping Up with Minimum Wage Compliance with BenefitMall

When outsourcing your payroll, you should look for a provider that will help keep you compliant with HR related needs. According to the NSBA, state and local tax compliance and payroll taxes are the most burdensome financially and administratively on small businesses and their owners.4 BenefitMall PayFocus has built in federal and state minimum wage warnings to help you stay compliant with your tax planning to save your business time and money. Did you know that among small businesses who handle payroll taxes internally, one-in-ten report spending more than 10 hours per month doing these tasks?4 That equates to more than 120 hours per year, or three full workweeks.  

PeopleFocus Wage Warning -
Click to view larger

 

To learn more about how BenefitMall can help your small business stay compliant with tax related issues such as federal and state minimum wages, check out allcompliance™, our ACA compliance tool.

 

 

SOURCES:

1. Fact Sheet - Wage and Hour Division (WHD) - U.S. Department of Labor. (n.d.). Retrieved January 18, 2016, from
    http://www.dol.gov/whd/regs/compliance/whdfs15.htm

2. State Minimum Wages | 2016 Minimum Wage by State. (n.d.). Retrieved January 18, 2016, from
    http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx

3. Taxable Wage Base Definition | Investopedia. (2008, October 8). Retrieved January 18, 2016, from
    http://www.investopedia.com/terms/t/taxable-wage-base.asp

4. NSBA 2015 Small Business Taxation Survey – National Small Business Association. Retrieved January 18, 2016, from
    http://www.nsba.biz/wp-content/uploads/2015/04/2015-Taxation-Survey.pdf