Minnesota minimum wage and no tip credit for restaurants (2026)

A restaurant owner who moves to Minnesota from a tip-credit state has to rework the payroll sheet. Minnesota does not let employers count tips toward the minimum wage, so a server, a bartender and a cook all start from the same hourly rate before any tips are added. On top of that, Minneapolis and St. Paul set their own higher minimums. This guide explains the state minimum, the no tip credit rule, how city rates fit in and how owners plan around the cost. It is general information, not legal advice. The Minnesota Department of Labor and Industry is the place to confirm any number.

What is the Minnesota minimum wage in 2026?

The state sets the minimum wage and the Department of Labor and Industry publishes the current figure, which can change from year to year. Take the hourly rate from the department, not from a guide, because a rate that applies in January can be out of date a year later. Put a reminder in your calendar for late summer to check the announcement for the next year.

Is there a tip credit in Minnesota?

No. Minnesota does not allow employers to count tips toward the minimum wage, and the Department of Labor and Industry can confirm how the rule applies to you. A tipped employee must be paid the full minimum directly, and tips are extra. This is a large difference from states where the cash wage for tipped staff is a fraction of the minimum. For a restaurant, it means labor costs are higher per hour for the front of the house and more predictable, because they do not depend on the size of the tips. It also changes hiring. Servers do not need to chase the busiest shifts to earn a living wage, which can make scheduling fairer and turnover lower. Some owners find they can offer steadier hours and attract experienced staff who value that stability.

Do cities set their own minimum wage?

Yes. Minneapolis and St. Paul have adopted local minimum wages that are higher than the state rate, and they can apply by employer size and with a schedule of increases. Other Minnesota cities may do the same. Read the city's own page for the rate that applies to your business, and record the date you checked it. If you have more than one location, you may pay different minimums in each. A city increase can come on a fixed date in the year, so mark it in your calendar and update payroll before the first pay period. Ask the city's labor standards office if you are unsure whether an employee is covered, for example one who splits time between locations.

How does a service charge fit in?

A service charge is not a tip. Because Minnesota does not allow tips to count toward the minimum, owners who add a service charge to the check to fund higher wages need to be careful about how it is described. Minnesota also has a pricing law that affects mandatory fees, which our separate guide on junk fees explains. Before you add any charge to the check, check the rule and the wording.

How should you plan labor around the rule?

With no tip credit, the cost of an hour is the same for every role, and the way to protect margin is to match hours to sales. Three habits help.

• Schedule from last year's sales for the same weeks, not from habit.
• Cross-train staff so that one person can cover a bar, a host stand or a prep station on a slow night.
• Review menu prices twice a year against the real cost of labor and food, and change items that lose money.

Seasonal swings matter in Minnesota. Winter and summer vacation weeks change traffic, so plan staffing for each. Build a simple chart of sales by week for the last two years, mark holidays and big events, and use it to set staffing for the same weeks this year. Check it again after a month, because a good chart is corrected as you go.

What records should you keep?

Keep time records, pay records and any written policy on service charges and tips. Keep them for the period the Department requires. Pay on a regular schedule and give each employee a statement showing hours and rates. If you have staff under 18, check the hour limits and the rules on their work.

What other Minnesota rules affect labor cost?

Minnesota has an earned sick and safe time law that applies to most employers, which our separate guide explains, and overtime and meal and rest break rules that affect scheduling. Check each as you set your labor budget, since they add to the true cost of an hour. Payroll taxes, workers' compensation insurance and any benefits you offer add further cost. A bookkeeper who knows Minnesota restaurants can build a labor budget in an afternoon, and it is worth the fee in your first year.

Is your restaurant paying for empty hours?

When every hour on the clock costs the same, the way to make a shift pay is more guests in it. Mosey is a food-first app where diners search by dish and mood, rate what they ate and keep lists of places they want to try, and where independent restaurants and cafes get tools for their own page, menu and regular guests. If you want more of your paid hours to be busy hours, being found by the dish is what Mosey is built around.

More guides for your business:

• How to keep your Minnesota restaurant busy through winter
• Minnesota earned sick and safe time: what restaurant owners must do
• Minnesota junk fee law: what it means for restaurant service charges

More in the US guides for food businesses.