- Current minimum wage: $7.25 an hour, the federal rate, which Texas law adopts by reference
- Tipped cash wage: $2.13 an hour, with up to $5.12 in tips counted toward $7.25
- Next scheduled change: none. The Texas rate moves only if Congress changes the federal minimum
- Effective date of the current rate: July 24, 2009, the last federal increase
Texas is the largest of the twenty states that still use the federal minimum wage. Its Minimum Wage Act does not set a number of its own. Section 62.051 of the Texas Labor Code simply tells employers to pay “the federal minimum wage under Section 6, Fair Labor Standards Act of 1938.” Whatever Congress decides, Texas follows. Congress last decided anything in 2009.
That makes Texas the opposite pole from California, where the state floor is $16.90 and cities stack their own rates on top. Between them, the two biggest state economies in the country run very different wage-floor policies, which is why we treat them as a matched pair.
Texas minimum wage rates for 2026
| Category | Rate | Rule and source |
|---|---|---|
| Standard minimum wage | $7.25 | Texas Labor Code §62.051 adopts the federal FLSA rate. |
| Tipped employees (cash wage) | $2.13 | Up to $5.12 of tips may count toward $7.25. If tips fall short, the employer makes up the difference. Texas defines a tipped employee as one who customarily receives more than $20 a month in tips (§62.052); the federal threshold is $30. |
| Youth opportunity wage | $4.25 | Federal rule: workers under 20, for their first 90 consecutive calendar days with an employer. Employers may not displace other workers to use it. |
| Local minimum wages | Not allowed | §62.0515 says the state minimum wage “supersedes a wage established in an ordinance, order, or charter provision governing wages in private employment, other than wages under a public contract.” |
| Next scheduled change | None | Only an act of Congress changes the Texas rate. |
One quirk is worth knowing. Section 62.151 says the state act does not apply to anyone already covered by the federal Fair Labor Standards Act. In practice, most Texas workers are protected by federal law directly, and the state act fills gaps for the few employers the FLSA does not reach. Either way, the number is the same.
What $7.25 adds up to in a year
A full-time year is 2,080 hours (40 hours × 52 weeks). At the Texas minimum:
That headline gap overstates how many Texans actually work at the floor. In the Bureau of Labor Statistics’ most recent annual count, about 120,000 of Texas’s roughly 7.2 million hourly workers, or 1.7 percent, earned at or below $7.25 in 2024. That figure includes tipped workers whose cash wage is below $7.25 and workers in exempt categories. Nationally the share was 1.0 percent. For most Texas workers, the legal minimum is not the price of their labor. The market sets that price, and it is well above the floor.
Why Texas cities can’t set their own minimum
Austin, Dallas, Houston and San Antonio have no citywide minimum wage for private employers, and under §62.0515 they cannot adopt one. Cities can still set pay for their own employees and can write wage requirements into public contracts, which the statute exempts. This is a deliberate policy choice. It keeps one labor-cost rule across a state with very different local economies, from the Rio Grande Valley to Midland to Austin.
Contrast this with California, which lets cities go higher and has dozens that do, or with Florida, which sets a high statewide floor but also bars local minimums (see our Florida page).
The natural experiment: Texas vs. California
Texas at $7.25 and California at $16.90 make for the most striking contrast on the national map. It is tempting to read that gap as a controlled trial: two huge, diverse state economies, one with a high wage floor and one with almost none, and then compare jobs, prices and migration.
It isn’t a clean trial, and honesty requires saying so. The two states differ in housing costs, taxes, energy, industry mix and regulation, and people and firms move between them for all of those reasons. Any raw comparison of Texas and California employment growth mixes the wage floor with everything else. Neither side of the minimum-wage debate should cite “look at Texas” or “look at California” as proof.
Economists try to isolate the wage floor by comparing places that are alike except for the law. The best-known version compares neighboring counties on opposite sides of a state line. Dube, Lester and Reich (2010) used every such county pair in the country and found no detectable job losses in restaurants. Neumark, Salas and Wascher argued that this design throws away useful variation, and found teen employment elasticities near −0.3 using other methods. A 2022 paper by Jha, Neumark and Rodriguez-Lopez found that redefining local labor markets as cross-state commuting zones turns the border-pair result into a negative restaurant employment effect. The fight is unresolved; our research tracker keeps score.
What the Texas–California pair does show clearly is the bite ratio at work. A $7.25 floor in Texas binds for under 2 percent of hourly workers, so Texas is a large economy where wages are set almost entirely by the market. California’s $16.90, and its $20 fast-food floor, bind far more often, especially in inland counties where local pay is lower than in San Francisco or Los Angeles. If wage floors cost jobs or hours, California is where to look for it, and Texas is the closest thing America has to a big-state control group for a world without a binding minimum.
The policy angle
Texas did not get to $7.25 by abolishing anything. It has simply declined to legislate above the federal number for seventeen years and has kept cities from doing it either. The result is a working demonstration of a point Milton Friedman made: the market wage for most jobs is set by what workers can produce and what other employers will pay, not by statute. Texans earning above $7.25 got there without a mandate.
The honest caveat is that a low floor does nothing for the household whose earnings are still too low. Our view is that the answer is a better transfer, not a higher price floor. The Earned Income Tax Credit tops up low earnings without making the first job harder to get, and it is paid by taxpayers broadly rather than by the employers most likely to hire inexperienced workers. For the full 51-state picture, see our state-by-state guide; for why the first rung matters, see the first job ladder.
Sources and further reading
- Texas Workforce Commission, Texas Minimum Wage Act (Labor Code ch. 62) — §§62.051, 62.0515, 62.052, 62.151.
- U.S. Department of Labor, Minimum Wages for Tipped Employees — table revised July 1, 2026.
- U.S. Department of Labor, Fact Sheet #32: Youth Minimum Wage.
- U.S. Department of Labor, History of Federal Minimum Wage Rates, 1938–2009.
- Bureau of Labor Statistics, Characteristics of Minimum Wage Workers, 2024 — table 3, state estimates (subject to sampling error).
- Dube, Lester & Reich, “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties” — Review of Economics and Statistics (2010).
- Neumark, Salas & Wascher, “Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?” — NBER Working Paper 18681 (2013).
- Jha, Neumark & Rodriguez-Lopez, “What’s Across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects” — CESifo Working Paper 9746 (2022).