Vermont minimum wage workers will receive a higher statutory pay rate beginning January 1, 2027, when the state’s standard minimum wage increases from $14.42 to $14.91 per hour.
The Vermont Department of Labor announced the 49-cent increase on November 9, 2026, giving employers and employees advance notice of the new rate.
The adjustment will also raise the basic tipped wage rate from $7.21 to $7.46 per hour for eligible service employees.
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New Vermont minimum wage takes effect January 1
The new Vermont minimum wage applies starting January 1, 2027, rather than immediately after the Department of Labor’s announcement.
That effective date means employers should use the current $14.42 hourly rate through December 31, 2026, unless another applicable wage requirement provides a higher rate.
Beginning with work covered by the new rate on January 1, employers must pay covered employees at least $14.91 per hour.
| Pay category | Current rate in 2026 | Rate beginning January 1, 2027 | Increase |
|---|---|---|---|
| Standard minimum wage | $14.42 per hour | $14.91 per hour | $0.49 |
| Basic tipped wage | $7.21 per hour | $7.46 per hour | $0.25 |
How Vermont’s tipped wage will work
Vermont’s tipped minimum wage is set at one-half of the state’s full minimum wage for qualifying service employees.
At the new rate, an eligible tipped employee may be paid a basic hourly wage of $7.46, provided the employee’s tips bring total compensation up to at least the regular $14.91 minimum wage.
The state’s law covers service or tipped employees in the hotel, motel, tourist-place and restaurant industries who customarily and regularly receive more than $120 per month in tips for direct and personal customer service.
If an employee’s tips do not bring pay up to the standard minimum wage, the employer must make up the difference.
Employees should keep records of hours worked, wages paid and tips received if they believe their total compensation does not meet the legal requirement.
Why Vermont’s minimum wage changes each year
Vermont law provides for an annual adjustment to the minimum wage beginning each January 1.
Under 21 V.S.A. § 384, the adjustment is based on the lesser of a 5 percent increase or the percentage increase in the Consumer Price Index for All Urban Consumers, commonly called CPI-U.
The calculation uses the 12-month period preceding the previous September 1, and the resulting wage is rounded to the nearest cent.
The law also states that the minimum wage cannot be reduced through the annual adjustment formula.
Because the tipped rate is tied to one-half of the standard minimum wage, an increase in the regular rate also changes the basic tipped wage.
What the 2027 increase means for employees
For a covered employee working 40 hours per week, the new standard rate would equal $596 in gross weekly pay before taxes and other deductions.
At the current $14.42 rate, the same schedule would produce $576.80 in gross weekly pay, making the difference $19.20 per week before deductions.
Those figures are examples based on a consistent 40-hour schedule and do not account for overtime, unpaid time, benefits, taxes or changes in hours.
For tipped employees, the higher basic cash wage will increase the direct hourly amount paid by the employer, but the employer’s total obligation remains tied to the full minimum wage after tips are included.
The new rate does not guarantee that every employee will receive the same weekly increase because schedules, overtime, tips and other compensation can vary.
What Vermont employers should prepare for
Employers should update payroll systems, wage notices, employee handbooks and workplace postings before the January 1 effective date.
Businesses that use a tip credit should also review how tips are recorded and how shortfalls are identified and paid.
Payroll records should clearly show the employee’s hourly rate, hours worked, tips reported and any additional amount paid to reach the required minimum.
Employers must also consider whether a federal, local, contractual or other applicable wage requirement provides a higher rate for a particular employee or workplace.
The Vermont Department of Labor’s Wage and Hour Program oversees state requirements involving minimum wage, overtime, wage payments, employee benefits, child labor and related workplace protections.
How employees can report a wage concern
Employees who believe they are being paid below the applicable Vermont minimum wage can contact the Department of Labor’s Wage and Hour Unit.
The agency lists 802-951-4083 as the Wage and Hour contact number and provides online information through its Worker Rights and Protections resources.
Workers may want to gather pay stubs, schedules, time records, tip records and messages about pay before contacting the agency.
A wage complaint can involve more than the posted hourly rate, including unpaid time, incorrect tip-credit calculations, overtime issues or deductions that affect required pay.
What changes on January 1, 2027
- The standard Vermont minimum wage rises from $14.42 to $14.91 per hour.
- The basic tipped wage rises from $7.21 to $7.46 per hour.
- The changes apply beginning January 1, 2027.
- Employers using a tip credit must ensure total pay reaches at least the full minimum wage.
- Vermont’s annual adjustment process remains tied to state law and the CPI-U formula.
The 2027 increase is a scheduled state wage adjustment, not a proposal or a future legislative vote.
Employees and employers should use the January 1, 2027 effective date when reviewing paychecks, payroll settings and workplace wage information.
Frequently Asked Questions
When will Vermont’s minimum wage increase to $14.91?
Vermont’s standard minimum wage will increase to $14.91 per hour on January 1, 2027.
What will Vermont’s tipped minimum wage be in 2027?
The basic tipped wage will increase to $7.46 per hour on January 1, 2027.
How much is Vermont’s minimum wage increasing?
The standard rate will increase by 49 cents, from $14.42 to $14.91 per hour.
Do tipped employees have to receive the full $14.91 per hour?
Their direct hourly wage may be $7.46 if they qualify under Vermont’s tipped-wage rules, but tips and wages combined must equal at least $14.91 per hour.
Where can Vermont workers report a wage problem?
Workers can contact the Vermont Department of Labor’s Wage and Hour Unit at 802-951-4083 or use the agency’s Worker Rights and Protections resources online.
Fact-Checked: The rates, effective date and tipped-wage rules were checked against the Vermont Department of Labor announcement and 21 V.S.A. § 384 on November 10, 2026.
Disclaimer: This article provides general information and is not legal or payroll advice.
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