U.S. States That Prohibit Tip Credit

Seven U.S. states prohibit business owners from claiming tip credits. Read this to find out which states these are, as well as everything else on tip credit.

Updated on August 13th, 2020

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By U.S. law businesses are allowed to use tip credit by paying tipped workers from $2.13 an hour if those workers earn at least the standard minimum wage of $7.25 an hour once their tips are added in.

This does not apply to businesses in all 50 U.S. states though, as tip credit is prohibited in seven states.

U.S. States That Prohibit Tip Credit:

  • Alaska.
  • California.
  • Guam.
  • Minnesota.
  • Montana.
  • Nevada.
  • Oregon.
  • Washington.

Minimum Hourly Wage for 2019 in States That Prohibit Tip Credits:


Minimum Hourly Wage for Tipped Employees








Large employers: $9.86, small employers (less than 500,000 in annual sales): $8.04









Where to Find More Information on Tip Credit:

Call 1 (866) 487-9243, visit www.dol.gov/agencies/whd or visit your nearest Wage and Hour Division (WHD) office for assistance.

Further Reading:

Find the U.S. Department of Labor (DOL) information on your state's tip credit here.