Vermont Minimum Wage: Rate, Tipped Wage, and Local Rules

Vermont sets its own minimum wage that is well above the federal floor, and it adjusts automatically every January based on inflation. As of 2025 the Vermont minimum wage was $14.01 per hour, and a new, slightly higher rate took effect on January 1, 2026 under the state's annual cost-of-living formula. Because the figure changes each year, you should treat any specific number as a starting point and confirm the current Vermont rate with the Vermont Department of Labor before relying on it. What does not change is the structure: Vermont's wage is far higher than the federal $7.25 under the Fair Labor Standards Act (FLSA), and tipped workers in Vermont are entitled to a cash wage equal to half the full state minimum, with tips required to make up the rest.

Vermont's minimum wage versus the federal $7.25

Under the federal FLSA, the nationwide minimum wage has been $7.25 per hour since 2009. When a state sets a higher minimum, employees are entitled to the higher state rate. Vermont's minimum has been substantially above $7.25 for years, so in practice nearly every covered Vermont employee is paid under the state standard, not the federal one.

Vermont law (21 V.S.A. § 384) establishes the state minimum wage and the formula for adjusting it. Beginning in 2023, after a series of scheduled step increases ended, the wage began rising each January 1 by the lesser of (a) five percent or (b) the percentage increase in the Consumer Price Index (CPI) for the prior year. This indexing means the Vermont minimum generally rises a little every year rather than staying frozen, which is why confirming the current-year figure matters.

For context, the rate was $12.55 in 2022, rose to $13.18 in 2023, $13.67 in 2024, and $14.01 in 2025 before the 2026 adjustment. Each step reflects the inflation formula. To see the exact rate in effect right now, check the Vermont Department of Labor's Wage and Hour pages, which publish the official minimum wage each year.

Tipped employees and the tip credit

Vermont allows a reduced cash wage for tipped employees, but the rules are specific. The required tipped cash wage in Vermont is set at 50% of the full state minimum wage. When the minimum was $14.01 in 2025, the basic tipped wage was therefore about $7.01 per hour, and it rises in step with the full minimum each January.

This tipped wage does not apply to every worker who receives the occasional tip. Under Vermont law it applies to employees of hotels, motels, tourist places, and restaurants who customarily and regularly receive more than $120 per month in tips for direct and personal customer service. Workers who do not meet that threshold must be paid the full minimum wage.

The tip credit works like this: the employer pays the cash wage, and the employee's tips are expected to bring total earnings up to at least the full minimum wage. If tips plus the cash wage do not reach the full state minimum in a given workweek, the employer must make up the difference. An employer cannot keep an employee's tips, and a valid tip pool generally cannot include managers, supervisors, or the employer. If you are paid a tipped cash wage but your tips are short, your effective pay must still equal the full Vermont minimum.

Overtime in Vermont

Vermont follows the familiar federal structure for overtime: covered, non-exempt employees must receive 1.5 times their regular rate for hours worked over 40 in a workweek. Vermont does not require daily overtime after eight hours in a day. Certain employers and categories are treated differently under state law, and some small retail or service establishments may be subject to specific provisions, so the overtime rules can interact with the minimum wage rules depending on the workplace. Tipped employees are still owed overtime, calculated on the full minimum wage rather than only on the lower cash wage.

Are there local (city or county) minimum wages?

No. Vermont does not have separate city or county minimum wages. The statewide rate set under 21 V.S.A. § 384 applies uniformly across the state, so an employee in Burlington, Montpelier, Brattleboro, or a rural town is entitled to the same minimum wage. Unlike states such as California or New York, Vermont has not authorized municipalities to set their own higher local minimums. This makes compliance simpler: there is one Vermont rate to track, plus the federal floor as a backstop.

Common exceptions and special cases

• Small or specific employers: Vermont's minimum wage law applies to most employers, but certain narrow categories may be exempt or treated differently under state or federal law. If you are unsure whether your employer is covered, ask the Vermont Department of Labor.
• Agricultural and certain seasonal work: Some agricultural and seasonal positions have special treatment under wage law. The details depend on the type of work and employer.
• Trainees, students, and youth: Limited federal subminimum provisions can exist for certain student-learners or workers under 20 in their first days of employment, but these are narrow and Vermont's full minimum is the default.
• Exempt salaried employees: Bona fide executive, administrative, and professional employees who meet salary and duties tests are exempt from minimum wage and overtime, the same as under the FLSA.

How to enforce your rights

If you believe you have been paid less than Vermont's minimum wage, paid an improper tipped wage, or denied overtime, you can file a wage complaint with the Vermont Department of Labor, specifically its Wage and Hour Program. The agency investigates unpaid-wage and minimum-wage claims and can pursue recovery of wages owed. You may also have the option to bring a claim under federal law with the U.S. Department of Labor's Wage and Hour Division, or to consult a Vermont employment attorney, particularly where back wages, liquidated damages, or retaliation are involved.

Practical steps that strengthen a claim:

• Keep your own record of hours worked, including start and end times and breaks.
• Save pay stubs, tip records, and any written wage agreements.
• Note the dates and amounts of any pay you believe was short.
• Act promptly, because wage claims are subject to time limits.

Retaliation for asserting wage rights, such as being fired or having hours cut after complaining, is prohibited, and that itself can be reported.

Where to confirm the current rate

The single most reliable source for Vermont's current minimum wage and tipped wage is the Vermont Department of Labor (labor.vermont.gov), which publishes the official figures each year along with the Wage and Hour rules. Because the rate is indexed to inflation and updates every January 1, always verify the present-year amount there rather than relying on a number from a prior year. For the federal comparison and overtime rules, the U.S. Department of Labor's Wage and Hour Division is the authoritative source. When state and federal rules differ, Vermont employees get whichever standard is more protective.

Official Vermont Sources

This page is based on Vermont employment law. Rules and figures change — verify the current details directly with the official Vermont sources below. This is general legal information, not legal advice.

• Vermont Department of Labor — official Vermont agency.
• Online Wage Claim Form - Vermont Department of Labor
• Vermont Statutes Annotated, Title 21 (Labor)

Federal law and local ordinances may also apply. Federal laws like the Fair Labor Standards Act set a national floor, and your city or county may add protections (such as a higher local minimum wage or paid sick leave). Check both alongside Vermont state law.