Minnesota’s Minimum Wage Will Increase By 2.5% In 2026 To Reflect Inflation

Workers in Minnesota will benefit from a modest minimum pay increase effective 1 January 2026. The statewide minimum is scheduled to increase by 28 cents to $11.41 per hour, an adjustment based on the annual rate of inflation of 2.5%. The one exception is for employees under the age of 20 in their first 90 days of training, who may be paid a minimum of $9.31 per hour, commencing next year.

Various sectors will likely benefit from higher disposable incomes among lower-income households. These include local retail, restaurants, home maintenance, and local and digital entertainment, such as online casinos. According to the kind of reviews available at Card Player, sites like these have seen a major uptick in popularity among local players in recent years. Swift payout processes, live dealer games, and expansive gaming libraries all add to the craze. However, for those on minimum wage, these kinds of entertainment sites are a luxury many can’t afford.

Fortunately, the Department of Labor and Industry announced its increase on August 20. From the first of January 2026, the statewide minimum will now apply broadly, across employers, providing some relief at least. This comes after the Legislature eliminated previous lower rates for small businesses, workers under the age of 18, and J-1 visa holders in 2024. Tips may not be counted toward meeting the minimum wage.

The Twin Cities of Minneapolis and St. Paul will maintain higher minimums, currently at $15.97 per hour for work done in these cities. These are set to increase according to inflation as well. Small and micro businesses in St. Paul may continue to pay a lower wage: legislation the city plans to phase out by 2028.

Minnesota law requires employers to display state-mandated posters in common areas where they are easily visible to employees. In addition, employers must provide each employee with a written notice before the increases take effect. These posters will be available for download in the fall from the Department of Labor and Industry.

Minnesota has tied its minimum wage to inflation since 2018, when the previous cap of 2.5% on annual increases was raised (up to 5%). This was done so lower-paid workers could receive larger raises during high inflation periods.

But the increased state minimum and even the higher Twin Cities’ rate still do not equal the basic cost of living. State figures show a childless, working-age adult needs about $17.68 per hour to meet basic living costs.

The increase will directly affect only a small number of workers, fewer than 90,000. This is out of more than 3.3 million salaried and hourly paid jobs in Minnesota, according to the state’s latest minimum wage report. However, economists note that increases raising the floor level often put pressure to increase wages just above the minimum as well. This creates a wider “ripple” of increases across roles.

Employers, employees, and policymakers will watch early 2026 payrolls closely to see how these increases translate, for example, into take-home pay, hiring decisions, and consumer spending. According to the Federal Reserve Bank of Boston, low-wealth households are typically more likely to spend an additional dollar quickly on goods and services, providing a quick local consumption boost.

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