Texas Minimum Wage & Tip Credit Calculator

What is the current minimum wage in Texas for 2026?

Under Texas Labor Code § 62.051, the Texas state minimum wage is identical to the federal Fair Labor Standards Act rate of $7.25 per hour. Texas has not raised its minimum wage independently since the federal rate was last adjusted in 2009.

Can cities like Austin, Dallas, or Houston set a higher minimum wage in Texas?

Under Texas Labor Code § 62.0515(a), "Except as otherwise provided by this section, the minimum wage provided by this chapter supersedes a wage established in an ordinance, order, or charter provision governing wages in private employment, other than wages under a public contract." Consequently, local municipal ordinances attempting to mandate higher private minimum wages in cities like Austin, Dallas, Houston, or San Antonio are preempted and unenforceable on ordinary private businesses.

Statutory Exceptions: Private-sector employment is not subject to an unconditional uniform $7.25 contractual floor. Higher minimum wage standards remain lawful under statutory exceptions: (1) Public contracts (§ 62.0515(a)), which excludes "wages under a public contract"; (2) Workforce programs (§ 62.0515(b)), exempting state or federal job training or workforce development programs; and (3) Government agreements (§ 62.0515(c)), which provides that preemption does not apply to a minimum wage established by a governmental entity that applies to a contract or agreement, including a non-annexation agreement, entered into by a governmental entity and a private entity.

What is the tipped minimum wage in Texas?

Under Texas Labor Code § 62.052 and 29 U.S.C. § 203(m)(2), an employer may pay a direct cash wage of $2.13 per hour to qualifying tipped employees and claim a maximum tip credit of $5.12 per hour, provided that direct cash wages plus actual tips equal at least $7.25 per hour for all hours worked. Under Texas Labor Code § 62.052(b), state law defines a tipped employee as someone receiving more than $20 a month in tips; however, for FLSA-covered employers, federal law (29 U.S.C. § 203(t)) requires more than $30 a month. If the tip credit is disallowed or forfeited (due to lack of advance notice or unlawful manager tip pooling), the employer owes the full statutory minimum wage ($7.25/hr regular, $10.875/hr overtime) in direct cash wages, and tips cannot offset this direct wage obligation.

What happens if my tips do not equal $7.25 per hour in Texas?

Under 29 C.F.R. § 531.59, if an employee's direct wages (at least $2.13/hr) combined with their actual tips do not equal at least $7.25 per hour across the workweek, the employer must make up the shortfall by paying additional direct cash wages on that paycheck. Combined gross earnings before taxes cannot legally average less than $7.25/hour for any workweek.

How is overtime pay calculated for tipped employees in Texas?

Under 29 U.S.C. § 203(m)(2), 29 C.F.R. Part 531, and official U.S. DOL Fact Sheet #15, overtime cannot be calculated as 1.5 times the $2.13 direct cash wage ($3.20/hr). Overtime must be calculated on the full statutory minimum wage: ($7.25 × 1.5 = $10.875) minus the maximum allowable tip credit of $5.12, which equals a minimum direct cash overtime wage of $5.755 per hour.

Can restaurant managers or supervisors take a cut of the tip pool in Texas?

No. Under federal law (29 U.S.C. § 203(m)(2)(B), 29 C.F.R. § 531.54(c)(2), and U.S. DOL Fact Sheets #15 & #15B), managers and supervisors (defined by the FLSA executive exemption duties test) are strictly barred from participating in or receiving disbursements from an employee tip pool, regardless of whether the employer claims a tip credit. Unlawful tip pooling invalidates the employer's tip credit. Sole-Service Exception: Under 29 C.F.R. § 531.54(c)(2), a manager or supervisor may keep tips that they receive directly from customers for services that the manager directly and solely provided without the assistance of any other employee.