Which states do not allow a tip credit?

California, Washington, Oregon, Nevada, Minnesota, Montana, Alaska do not permit an employer to count tips toward the minimum wage. In those states a tipped employee must be paid the full applicable minimum wage in cash, and tips are on top of it. The District of Columbia is phasing its tip credit out on a schedule. Because no tip credit is taken, these states generally permit a tip pool that includes back-of-house staff. Confirm with each state’s labor agency, as rules and rates change.

Do tip pooling laws vary by state?

Yes, substantially. Federal law sets a floor: tips belong to employees, managers and supervisors may never share in a mandatory pool, and taking a tip credit limits the pool to customarily tipped front-of-house staff. States can be stricter. Some ban the tip credit entirely, some cap it below the federal maximum, some restrict mandatory tip sharing, and some impose service charge disclosure requirements. City ordinances can add another layer on top.

Can managers be in a tip pool in any state?

No. Under the federal Fair Labor Standards Act, managers and supervisors may not participate in a mandatory tip pool anywhere in the United States, regardless of how much tipped work they personally perform. They may keep only tips from customers for service they directly and solely provided. No state permits otherwise, because federal law is the floor.

Reference

Tip pooling laws by state

Every state sits on top of the same federal floor, and then changes it. Here is what differs, where it differs, and a link to the agency that actually decides.

Reviewed September 25, 2026 · General information, not legal advice

Federal law sets three rules that apply everywhere: tips belong to the employee, managers and supervisors may never share in a mandatory tip pool, and taking a tip credit limits the pool to customarily tipped front-of-house staff.

States build on that. 7 states ban the tip credit outright, several cap it below the federal maximum, and a few restrict mandatory tip sharing or require service charge disclosure. Cities can add more on top.

State-by-state

Figures are as of the date on each state's page and change — most often each January. Always confirm against the linked state agency before relying on a number.
State	Tip credit	Tipped cash wage	Minimum wage	Back of house in pool
California	No tip credit	$16.90	$16.90	Generally permitted
Washington	No tip credit	$17.13	$17.13	Generally permitted
Oregon	No tip credit	$15.05	$15.05	Generally permitted
Nevada	No tip credit	$12.00	$12.00	Generally permitted
Minnesota	No tip credit	$11.41	$11.41	Generally permitted
Montana	No tip credit	$10.85	$10.85	Generally permitted
Alaska	No tip credit	$13.00	$13.00	Generally permitted
District of Columbia	Phasing out	$10.00	$17.95	Not while a tip credit is taken
Illinois	Tip credit allowed	$9.00	$15.00	Not while a tip credit is taken
New York	Tip credit allowed	$11.00	$16.50	Not while a tip credit is taken
Massachusetts	Tip credit allowed	$6.75	$15.00	Not while a tip credit is taken
Michigan	Tip credit allowed	$4.74	$12.48	Not while a tip credit is taken
Texas	Tip credit allowed	$2.13	$7.25	Not while a tip credit is taken
Florida	Tip credit allowed	$10.98	$14.00	Not while a tip credit is taken
Pennsylvania	Tip credit allowed	$2.83	$7.25	Not while a tip credit is taken
Arizona	Tip credit allowed	$11.70	$14.70	Not while a tip credit is taken
Colorado	Tip credit allowed	$11.79	$14.81	Not while a tip credit is taken

The states with no tip credit

In these states an employer may not count tips toward the minimum wage. Tipped staff get the full applicable minimum wage in cash, and tips sit on top. This has a second-order effect owners often miss: because no tip credit is taken, the 2021 federal rule generally permits a broader tip pool that can include back-of-house.

California Washington Oregon Nevada Minnesota Montana Alaska

The District of Columbia is phasing its tip credit out on a multi-year schedule, and the City of Chicago is doing the same within city limits.

Three things that catch operators out

Your city may not match your state. Seattle, Denver, Chicago, Flagstaff, Minneapolis, and many California cities set their own rates. The state table is the floor, not the answer.
Not every state changes rates in January. Oregon and D.C. change July 1. Florida changes September 30. If you only diary a January review, you will be wrong for part of the year.
Service charges are not tips. An auto-gratuity on a party of eight is generally the employer's revenue under federal law, and any share paid out is wages — which changes overtime math. Several states add disclosure requirements on top.

States not yet covered

We are adding these. Until each has its own page, the federal side-by-side table is the fastest reliable answer: U.S. DOL — minimum wages for tipped employees by state →

Alabama · Arkansas · Connecticut · Delaware · Georgia · Hawaii · Idaho · Indiana · Iowa · Kansas · Kentucky · Louisiana · Maine · Maryland · Mississippi · Missouri · Nebraska · New Hampshire · New Jersey · New Mexico · North Carolina · North Dakota · Ohio · Oklahoma · Rhode Island · South Carolina · South Dakota · Tennessee · Utah · Vermont · Virginia · West Virginia · Wisconsin · Wyoming

Whatever your state says, the record is what protects you. Employers carry the burden of showing that tips plus cash wages reached the full minimum wage, and that the pool only included people who were allowed in it. PaidFair keeps that record automatically — who worked, what was counted, how it split, to the cent.

Start free in your browser → Try the tip pool calculator

General information, not legal advice. PaidFair is not a law firm and this page is not a substitute for advice about your business. Every figure here links to the agency that publishes it — check there before you act, and talk to an employment attorney in your state.

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