New Minimum Wage Rates for 2026

The new year always brings changes in payroll, and 2026 is no exception. New York and New Jersey have both announced statewide minimum wage increases that take effect January 1, 2026 — and employers need to be ready.

Staying compliant isn’t just updating a number in your payroll system. These changes impact tipped employees, exempt-salary thresholds, home care workers, and pay notices. Getting it right now means avoiding surprises, retro pay, and headaches later.

Here’s a clear breakdown of what’s changing and how to prepare.

New York Minimum Wage Updates for 2026

Beginning January 1, 2026, New York’s hourly minimum wage increases to:

$17.00/hour — NYC, Nassau, Suffolk & Westchester
$16.00/hour — Remainder of the state

But that’s just the starting point. Several related pay requirements are also adjusting.

Tipped Employees: New Cash Wages & Tip Credits

New York’s hospitality and service rules remain some of the most detailed in the country. Employers must ensure that cash wages + tips equal at least the full minimum wage.

Food Service Workers (waitstaff, bartenders, bussers):

Downstate: $11.35 cash wage + $5.65 tip credit = $17.00
Rest of State: $10.70 cash wage + $5.30 tip credit = $16.00

Service Employees (non-food service):

Downstate: $14.15 cash wage + $2.85 tip credit = $17.00
Rest of State: $13.30 cash wage + $2.70 tip credit = $16.00

To claim the tip credit, employees must meet weekly tip-threshold averages:

$3.65/hour (downstate)
$3.40/hour (rest of NY)

If the weekly tip average falls below the threshold, you cannot apply a tip credit — the full minimum wage must be paid in cash wages.

Fast-food workers: still not eligible for tip credits.

Home Care Aides

These rates are increasing separately:

$19.65/hour — Downstate
$18.65/hour — Rest of NY

Exempt Salary Requirements

To be classified as executive or administrative exempt in 2026, employees must earn at least:

$1,275/week (≈ $66,300/year) — NYC, Nassau, Suffolk, Westchester
$1,199.10/week (≈ $62,395.20/year) — Rest of NY

If someone falls below these thresholds, they must be treated as non-exempt, which means overtime eligibility.

New Jersey Minimum Wage Updates for 2026

New Jersey’s minimum wage will rise on January 1, 2026 as follows:

$15.92/hour — Most employees
$15.23/hour — Seasonal employees & employers with fewer than 6 workers

Additional classifications:

Agricultural workers: $14.20/hour
Direct-care staff (long-term care): $18.92/hour
Tipped workers:
- Cash wage: $6.05/hour
- Maximum tip credit: $9.87
- Combined wages + tips must reach $15.92/hour

What Employers Should Do Now

A quick review in December saves a scramble in January. Here are the actions we recommend:

1. Update Pay Rates

Verify that every employee’s hourly rate meets the new state minimums.

2. Check Your Tipped Employees

Confirm:

Cash wages meet the new rules
Weekly tips hit the required tip-threshold amounts
Combined earnings reach the full minimum wage

3. Review Exempt Salaries (NY Employers)

If exempt employees don’t meet the new weekly minimums, they must be reclassified or receive a salary adjustment.

4. Issue Updated Pay-Rate Notices

New York requires written notice anytime an employee’s pay rate changes.

5. Prepare Now — Not on December 31

Payroll compliance is always easier to handle early. Waiting until the last minute increases the risk of errors, DOL issues, or missed deadlines.

Need Help Updating Your Payroll for 2026?

Baron Payroll clients count on us to keep their business compliant — no guesswork, no stress, no last-minute scrambling. If you want help reviewing your pay rates, tipped-employee rules, or exempt thresholds, we’re here for you.

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