Pennsylvania Minimum Wage 2026: Still $7.25, and What the Pending Bill Would Change
Pennsylvania Minimum Wage 2026: Still $7.25, and What the Pending Bill Would Change
If you are hiring your first employee in Pennsylvania, the number to plan around is $7.25 an hour. The state minimum wage has not changed for 2026, no increase took effect in January 2026, and none is scheduled for 2027 unless a pending bill becomes law. This guide covers the current rate, the tipped minimum wage rule, what House Bill 2189 would do, where that bill stands as of October 2026, and how to plan payroll while the law is unsettled.
Informational only: This guide is general information, not legal or tax advice. Wage rules and bill status can change quickly. Before you set pay, consult a qualified employment attorney or CPA, and confirm current rates with the Pennsylvania Department of Labor & Industry at pa.gov/agencies/dli.
Quick answers
- Current PA minimum wage: $7.25 an hour for most employees.
- Tipped cash wage: $2.83 an hour, only for employees who receive at least $135 a month in tips, with the employer covering any shortfall.
- Pending increase: HB 2189 would raise the rate to $11 on January 1, 2027, but it has not been enacted.
- PA minimum wage 2027: Plan for $7.25 unless a new law is signed, and model a $11 scenario in case it is.
The Pennsylvania minimum wage today
The Pennsylvania minimum wage is $7.25 an hour for most employees. Build that rate into your budget, job postings, and offer letters until a new law changes it. The wage rule applies to your employees regardless of how your business is organized. An LLC and a corporation owe the same wage rate, and so does a sole proprietor who hires staff.
Pennsylvania has no state general business license and no county business licenses. Your wage obligations come from employment law, not from a license you apply for. Some owners assume that formation paperwork covers payroll. It does not. Forming the entity with the Department of State and registering for payroll taxes with the Department of Revenue are separate steps, and both need your attention.
The pennsylvania tipped minimum wage
Restaurant, bar, and salon owners searching for the pennsylvania tipped minimum wage usually want to know whether they can pay less than $7.25. The answer is yes, but only under strict conditions.
An employer may pay a tipped employee a cash wage of $2.83 an hour if that employee receives at least $135 a month in tips. Tips make up the rest of the employee's pay. If tips do not bring the employee up to $7.25 an hour, the employer must make up the shortfall. The lower cash wage is not a blanket discount for every server or bartender. Employees below the $135 monthly threshold are not covered by the $2.83 rate.
| Employee situation | Cash wage per hour | What the employer owes |
|---|---|---|
| Standard employee | $7.25 | Full minimum wage |
| Tipped employee receiving at least $135 a month in tips | $2.83 | Any amount needed to bring total pay to $7.25 an hour |
For illustration, suppose a server works 80 hours in a period. At $7.25 an hour, the required total is $580. At the $2.83 cash wage, the cash portion is $226.40, so tips must cover at least $353.60 for the employer to avoid a make-up payment. Confirm with the Department of Labor & Industry how the measurement period and recordkeeping work, because the $135 threshold is monthly. Set up a way to record each tipped employee's tips every month. Without those records, you cannot show that the $2.83 rate was used correctly.
What HB 2189 would change
House Bill 2189 is the main proposal to raise the state minimum wage. As described, it would raise the rate in steps and then tie future increases to the cost of living. The schedule below reflects the bill as described, with the tipped cash wage set at 60 percent of the minimum wage.
| Effective date | Minimum wage | Tipped cash wage (60% of minimum) |
|---|---|---|
| Current law | $7.25 | $2.83 for tipped employees who meet the $135 monthly threshold |
| January 1, 2027 | $11.00 | $6.60 |
| 2028 | $13.00 | $7.80 |
| 2029 | $15.00 | $9.00 |
| 2030 and after | Cost-of-living increases | 60% of the minimum wage then in effect |
The tipped figures in the table are calculated from the bill's 60 percent rule. Confirm the final numbers against the bill text before you rely on them, since amendments can change them.
The bill also reportedly would let counties adopt the $15 rate sooner than the state schedule provides. Confirm how that provision is written and whether it would hold up under the state preemption rule for local governments discussed below.
Where HB 2189 stands in October 2026
HB 2189 passed the Pennsylvania House by a 104-95 vote on March 24, 2026. It then stalled in the Senate Labor and Industry Committee. The bill is not included in the 2026-27 state budget. As of October 2026, no increase has been enacted, so $7.25 remains the rate in effect.
A stalled bill is not a dead bill, and the legislature can move quickly when session time gets tight. That is why there is no single safe number to commit to for next year. The practical approach is to budget at $7.25 for now, and run a second payroll scenario at $11 so you can switch quickly if the law changes.
Pennsylvania minimum wage 2027: two scenarios
- If no new law passes: The current $7.25 rate stays in effect into 2027 unless a future law changes it.
- If HB 2189 passes in its current form: The rate would rise to $11.00 on January 1, 2027, then $13.00 in 2028 and $15.00 in 2029.
Do not promise a 2027 raise to staff, and do not write a specific future rate into a contract until the law is final. Confirm the rate with the Department of Labor & Industry before you change pay.
Philadelphia is different, but only for city work
Philadelphia has a $15 minimum wage, but that rule does not reach most private employers in the city. It covers city workers and employees of city contractors. The city cannot set a minimum wage for private-sector employers because state law preempts local governments under Act 112 of 2006. If you open a business in Philadelphia, the state rate of $7.25 governs your general staff, and the city's $15 rate applies only to the city-linked roles described above.
If you bid on city contracts, read the wage terms before you price the bid. A contract may require the city's rate for covered workers even though that rate does not apply to the rest of your staff.
What this means for setting up your business
Your entity choice does not change your wage rate, but it does change the paperwork and the order you file it in. Here is a practical sequence for new employers:
- Form the entity. The filing fee for a Certificate of Organization for an LLC, or Articles of Incorporation for a corporation, is $125 through the Department of State at file.dos.pa.gov. Pennsylvania does not use registered agents. Instead, you list a registered office with a street address, or use a Commercial Registered Office Provider if you have no Pennsylvania address. A post office box alone is not accepted. LLCs have no publication requirement.
- Register for payroll tax accounts. Register through myPATH using the Department of Revenue's business tax registration page. The PA-100 form was retired in 2022, so ignore any guide that still tells you to file it.
- Set your pay rates. Use $7.25 unless you qualify for the tipped rule. If you do use the tipped rule, document tips every month.
- Calendar a review. Check the bill status and the wage rate each January, and again before your first raise cycle. A rate change can arrive with little notice.
Formation filings and wage compliance are separate checklists. Keep both in front of you, and speak with a CPA before your first payroll run if you are unsure how payroll taxes apply to your structure.
Official sources to confirm
- Pennsylvania Department of Labor & Industry, for the current minimum wage and tipped wage rules: pa.gov/agencies/dli
- Pennsylvania Department of State, Business Filing Services: file.dos.pa.gov
- Pennsylvania Department of Revenue: pa.gov/agencies/revenue
- Pennsylvania Small Business Development Centers, which can point you to local advisors on payroll planning: pasbdc.org
This guide is informational, not legal or tax advice. Wage law is changing, and the bill may pass, stall, or change before you hire. Check the official sources above before you set pay, and consult a qualified employment attorney or CPA for decisions that carry real financial or legal exposure.