Vermont Minimum Wage 2026: $14.42 per Hour, Tipped $7.21
Vermont's minimum wage is $14.42 per hour in 2026, up from $14.01, with a $7.21 tipped basic wage. The annual CPI formula, increase history since 2021, the two-employee coverage threshold, exemptions, overtime rules, and what a full-time minimum wage worker earns.
Vermont's minimum wage is $14.42 per hour in 2026, effective January 1, 2026, up 41 cents from $14.01 in 2025. Tipped service employees must be paid a basic wage of at least $7.21 per hour, half the minimum wage. The rate is adjusted every January 1 by the lower of 5 percent or the change in the Consumer Price Index, so the next increase takes effect January 1, 2027.
- Vermont's minimum wage is $14.42 per hour as of January 1, 2026
- The tipped basic wage is $7.21, set by law at 50 percent of the minimum wage
- The rate rises each January 1 by the lower of 5 percent or CPI inflation
- The state law applies to employers with two or more employees
- No Vermont city sets its own rate; Burlington follows the state figure
Current Vermont Minimum Wage
Vermont's minimum wage increased to $14.42 per hour on January 1, 2026. The Vermont Department of Labor's announcement states that "the State's minimum wage will increase from $14.01 to $14.42 per hour - an increase of $0.41," and that the tipped minimum wage rises from $7.01 to $7.21. The US Department of Labor lists Vermont at $14.42 in its state minimum wage table.
The adjustment mechanism is in 21 V.S.A. § 384. Each January 1, the rate increases by 5 percent or by the percentage change in the CPI, whichever is smaller, and it can never fall. The statute also provides that if the federal minimum wage ever exceeds Vermont's rate, the federal rate applies.
Vermont Minimum Wage vs Federal Minimum Wage
| Rate | Vermont | Federal (FLSA) |
|---|---|---|
| Minimum wage | $14.42 per hour | $7.25 per hour |
| Tipped cash wage | $7.21 | $2.13 |
| Difference | $7.17 above federal | Baseline |
| Last changed | See schedule below | July 24, 2009 |
When state and federal rates differ, the employer must pay the higher one for any employee covered by both laws. In Vermont the state rate is higher, so it governs for every covered employee, and the federal $7.25 is irrelevant except as a floor for the few workers the state law exempts. The federal rate has been $7.25 since July 24, 2009, and there is no scheduled federal increase. Our minimum wage by state guide compares every state.
Tipped Minimum Wage in Vermont
Vermont's basic tipped wage rate for service or tipped employees is 50 percent of the full minimum wage, which makes it $7.21 per hour in 2026. The employer may credit tips for the other $7.21, but only if the employee's basic wage plus tips reaches $14.42 for every hour worked. If it does not, the employer must make up the difference in the same pay period.
Vermont defines a service or tipped employee as one who customarily and regularly receives more than $120 a month in tips for direct and personal customer service, a much higher threshold than the federal $30. Employees who do not meet it must be paid the full $14.42.
| Item | Vermont (2026) | Federal |
|---|---|---|
| Full minimum wage | $14.42 | $7.25 |
| Minimum cash wage for tipped employees | $7.21 | $2.13 |
| Maximum tip credit | $7.21 | $5.12 |
Vermont Minimum Wage Increase Schedule
| Effective date | Minimum wage |
|---|---|
| Jan 1, 2021 | $11.75 |
| Jan 1, 2022 | $12.55 |
| Jan 1, 2023 | $13.18 |
| Jan 1, 2024 | $13.67 |
| Jan 1, 2025 | $14.01 |
| Jan 1, 2026 | $14.42 |
The next adjustment takes effect January 1, 2027, capped at 5 percent. The Department of Labor announces the figure in the fall once the CPI data is available. The larger jumps in 2021 and 2022 came from a 2019 statute that set fixed steps to $12.55 before the CPI formula resumed.
Local Minimum Wages in Vermont
No Vermont municipality sets a local minimum wage. Burlington, South Burlington, and Rutland all follow the statewide rate. Vermont's Dillon's Rule framework leaves wage regulation to the state.
How Vermont Compares to Neighboring States
Employers that hire across state lines, or compete for workers with employers over the border, should know how Vermont compares. Rates below are the US Department of Labor's figures as of July 1, 2026.
| State | 2026 minimum wage | Tipped cash wage |
|---|---|---|
| New York | $17.00 | Varies by region |
| New Hampshire | $7.25 | $3.27 |
| Massachusetts | $15.00 | $6.75 |
| Vermont | $14.42 | $7.21 |
Vermont sits in the middle of its region: New York and Massachusetts pay more, while New Hampshire pays less. Remote employees are generally owed the minimum wage of the state where they physically work, not where the employer is based, so a Vermont company with staff in a neighboring state must apply that state's rate to those employees.
Who Is Covered and Who Is Exempt
Vermont's minimum wage law (21 V.S.A. Chapter 5, Subchapter 3) applies to employers with two or more employees. Exemptions from the state minimum wage include:
- Full-time high school students working part time
- Employees of nonprofit organizations in certain roles, and workers in seasonal camps
- Agricultural workers
- Domestic workers in private homes
- Taxi drivers and outside salespeople
- Bona fide executive, administrative, and professional employees
An employee exempt under Vermont law may still be covered by the federal FLSA, which then requires at least $7.25 and overtime after 40 hours. Our exempt vs non-exempt guide explains the federal salary and duties tests.
Overtime and the Minimum Wage
Vermont requires overtime at one and a half times the regular rate after 40 hours in a workweek, matching federal law, but exempts several industries from the state overtime rule, including retail and service establishments, hotels, restaurants, hospitals, and nursing homes. Those employers still owe federal overtime if the FLSA covers them, which it almost always does.
Here is what a 45-hour week costs at the Vermont minimum wage under the 40-hour rule:
| Line | Hours | Rate | Pay |
|---|---|---|---|
| Regular hours | 40 | $14.42 | $576.80 |
| Overtime hours | 5 | $21.63 (1.5x) | $108.15 |
| Gross pay for the week | 45 | $684.95 |
Overtime must be calculated on the employee's regular rate, which includes shift differentials and non-discretionary bonuses, not just the base wage. See our guide to overtime pay laws in the US and use the overtime calculator to check a specific week.
What a Minimum Wage Worker Earns in Vermont
| Basis | Hourly | Weekly (40 hours) | Monthly (173.33 hours) | Annual (2,080 hours) |
|---|---|---|---|---|
| Full minimum wage | $14.42 | $576.80 | $2,499.42 | $29,993.60 |
| Tipped cash wage only | $7.21 | $288.40 | $1,249.71 | $14,996.80 |
These are gross figures before taxes and deductions, and they assume a full 40-hour week with no unpaid time off. A tipped employee's total pay must reach at least the full minimum wage row once tips are added. To convert a different hourly rate, use the salary to hourly calculator, and see our explainer on gross pay for what is included before deductions.
Employer Compliance Checklist
- Pay at least $14.42 per hour for every hour worked, including training, meetings, and time spent waiting or on call at the workplace
- If you take a tip credit, give written notice, track tips by pay period, and make up any shortfall to $14.42
- Display the required state and federal minimum wage posters where employees can see them
- Pay overtime at 1.5 times the regular rate after 40 hours in a workweek, and never average hours across weeks
- Keep accurate time records for at least three years; a time card calculator helps verify weekly totals before payroll runs
- Review exempt classifications against the salary and duties tests; a job title alone does not make an employee exempt
- Check the labor law compliance hub for related state rules on breaks, leave, and final pay
Frequently Asked Questions
What is the minimum wage in Vermont in 2026?
$14.42 per hour, effective January 1, 2026. The 2025 rate was $14.01.
When is the next Vermont minimum wage increase?
January 1, 2027. The rate rises each year by the lower of 5 percent or the CPI change, and the Department of Labor announces the new figure in the fall.
What is the tipped minimum wage in Vermont?
$7.21 per hour in 2026, which is 50 percent of the minimum wage. Tips must bring the employee to at least $14.42 per hour.
Who counts as a tipped employee in Vermont?
An employee who customarily and regularly receives more than $120 a month in tips for direct customer service. That is higher than the federal $30 threshold.
Does Vermont's minimum wage apply to every employer?
The state law applies to employers with two or more employees. Single-employee businesses may still be covered by the federal FLSA.
Does Burlington have a higher minimum wage?
No. All Vermont cities follow the statewide rate.
How much does a full-time minimum wage worker earn in Vermont?
$576.80 a week and $29,993.60 a year before taxes at $14.42 per hour, based on 2,080 hours.
Sources
- Vermont Department of Labor, minimum wage increase announcement
- Vermont Department of Labor, Minimum Wage and Overtime
- US DOL, State Minimum Wage Laws (July 1, 2026)
- US Department of Labor, Minimum Wages for Tipped Employees
Reviewed September 2026
Rates and rules on this page were checked against the US Department of Labor's state minimum wage tables (effective July 1, 2026) and the Vermont sources listed above. Minimum wage laws change through legislation, ballot measures, indexing, and court decisions. Confirm the current rate with the state labor agency before setting pay, and see our labor law compliance guides for related rules.
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