The 7 States With No Tip Credit in 2026

The Seven States

Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. That is the full list, confirmed by the Congressional Research Service's analysis of the Fair Labor Standards Act's tip credit provisions and every major 2026 wage survey I checked. In these states, the concept of a "tipped minimum wage" does not really exist as a separate number: the tipped wage is the minimum wage.

Rates shown are 2026 statewide figures from public wage surveys; several states adjust annually and many cities set higher local rates. Verify with the state labor agency before running payroll.

What "No Tip Credit" Means for a Paycheck

Put two servers side by side. One works in Texas, where the federal $2.13 cash wage applies. The other works in Washington at $17.13. Both work 40 hours in a slow January week and each earns $200 in tips.

The Texas server's guaranteed pay from the employer is $85.20 for the week. The tips bring the total to $285.20, and if that falls short of minimum wage for the hours worked, the employer owes makeup pay, but the floor the employer guarantees is $85.20. The Washington server's guaranteed pay is $685.20, and the $200 in tips sits entirely on top of it, for $885.20 total. Same job, same hours, same tips. The difference is not effort or skill. It is which side of a state line the restaurant sits on.

That gap is why labor disputes look different in these seven states. With base pay off the table, fights tend to center on tip pooling abuse, managers skimming the pool, or misclassifying workers as tipped when they are not. The base wage battle was already won by statute.

What Changes for Employers and Payroll

If you run a restaurant group across state lines, the no-tip-credit states simplify some things and complicate others. The simplifications are real: there is no reduced tipped rate to configure, no makeup pay calculation to run each period, and no tip credit notation on pay stubs. The employee's hourly rate in the payroll system is simply the state minimum wage or the agreed rate above it. Tips do not enter the wage calculation at all.

What does not go away: tip reporting and tax obligations. Tips are still taxable income, still reported, still subject to withholding. Operators in these states also need to watch tip pooling rules closely, because the broader "nontraditional" pools allowed when no tip credit is taken come with their own notice and eligibility requirements. And the labor cost math is unforgiving. A full-service restaurant in California is paying its entire front-of-house staff at least $16.90 an hour before tips, which is why menu prices and service charges in these states look the way they do. That is the policy trade-off made visible: higher guaranteed wages for workers, higher operating costs for employers, and the customer sees it in the check.

Who Might Join the List

The list is not static. Washington, D.C. is phasing out its tip credit under Initiative 82, with the tipped wage scheduled to reach the full D.C. minimum wage by 2027. Voters and legislatures in several other states revisit the tip credit nearly every session. Illinois, New York, and Michigan have all seen serious legislative pushes in recent years, and the politics run in one direction: once a jurisdiction starts phasing out the credit, I have never seen one reinstate it.

My read on the trend: the seven-state list grows by attrition, not by sudden reversals. Ballot measures like D.C.'s Initiative 82 are the mechanism to watch, because tip credit repeal polls well with voters even when restaurant lobbies fight it in legislatures. If you operate in a state with an active campaign, plan payroll as if the phaseout is coming. The phase-in periods are usually measured in years, which is enough time to adjust pricing and labor models if you start early.