What changes for restaurants on January 1, 2027

On January 1, 2027, 16 states raise their minimum wage, and many raise the cash wage for tipped staff too. Illinois’ junk fee law starts the same day, Connecticut’s paid sick leave reaches the smallest employers, and your 2026 W-2s need new tip reporting. Here is what changes, state by state, and what to do in December.

This is a plain-English summary of public sources we checked on November 11, 2026. It is not legal advice. Check the official source for your state before you change pay or prices.

Minimum and tipped wage changes on January 1, 2027

Only states with a real change on or around January 1 are listed. “No tip credit” means tipped staff must get the full minimum wage before tips.

State	Minimum wage: 2026 → 2027	Tipped cash wage: 2026 → 2027
Arizona*	$15.15 → $15.65	Up to $3.00 less than minimum: $12.15 → $12.65
California	$16.90 → $17.40	No tip credit
Colorado	$15.16 → $15.71	$12.14 → $12.69
Connecticut	$16.94 → $17.48	No change announced (servers $6.38, bartenders $8.23)
Maine	$15.10 → $15.70	$7.55 → $7.85
Michigan	$13.73 → $15.00	$5.49 → $6.30 (42% of minimum)
Minnesota	$11.41 → $11.87	No tip credit
Montana	$10.85 → $11.20	No tip credit
Nebraska	$15.00 → $15.26	$2.13, no change
New Jersey	$15.92 → $16.48	$6.05 → $6.61
Ohio	$11.00 → $11.40	$5.50 → $5.70
Rhode Island	$16.00 → $17.00	$3.89, no change
South Dakota	$11.85 → $12.30	$5.925 → $6.15
Vermont	$14.42 → $14.91	$7.21 → $7.46
Virginia	$12.77 → $13.75	$2.13, no change
Washington	$17.13 → $17.73	No tip credit

*Arizona’s $15.65 comes from news coverage of the state’s inflation adjustment. The Industrial Commission’s site did not load for us, so confirm the rate there.

A few details that matter:

• New Jersey: employers with fewer than six employees, and seasonal employers, go from $15.23 to $16.25. The maximum tip credit stays $9.87.
• Michigan: the tipped share rises 2 points a year until it reaches 50% in 2031. The minimum is $15.00 on January 1, 2027.
• Ohio: the state rate applies to businesses with annual gross receipts over $419,000 (up from $405,000). Smaller businesses follow different rules; see the Ohio notice.
• Virginia: the minimum rises again to $15.00 on January 1, 2028.

For every state’s current rates, see our restaurant minimum wage by state page.

Big cities with January 1 changes

Some cities set their own, higher minimum. These city rates were confirmed on city pages:

City	2026 → 2027
Seattle, WA	$21.30 → $22.14
Denver, CO	$19.29 → $19.84
San Diego, CA	$17.75 → $18.35 (tips don’t count toward it)

Many other cities in California, Colorado and elsewhere also adjust on January 1. Check your city’s labor office.

States that do NOT change on January 1

• New York: stays $17.00 in New York City, Long Island and Westchester and $16.00 in the rest of the state. The tipped food service cash wage stays $11.35 and $10.70. The state says an “off-ramp” condition in the law was met. The Governor has proposed $17.60 and $16.55 from March 1, 2027, but only if the Legislature approves.
• Delaware, Illinois, Maryland, Massachusetts, Missouri, Nevada and New Mexico: no statewide change on January 1, based on the US Department of Labor’s state table and state pages.
• Federal: the federal minimum stays $7.25, and the federal tipped cash wage stays $2.13.

Changes later in 2027 and 2028 to watch

• Alaska: $15.00 on July 1, 2027. Alaska has no tip credit.
• Oregon, DC and Chicago: adjust every July 1.
• Florida: $15.00 since September 30, 2026. Yearly inflation increases follow later; secondary sources give different start dates, so check Florida’s official notice. Nothing changes in January 2027.
• Hawaii: $18.00 on January 1, 2028.

Fee and pricing laws: Illinois starts January 1, 2027

Illinois’ Junk Fee Ban Act (HB 228) became Public Act 104-0472. The Illinois General Assembly lists its effective date as January 1, 2027. Here is what the law’s text says, in plain English:

• The main rule. It is unlawful to advertise, display or offer a price that does not include all mandatory fees or surcharges. Government taxes are not counted as fees.
• Restaurants and automatic gratuities. A food or beverage business can charge an automatic or mandatory gratuity on top of the price only if every offer or ad that shows prices clearly discloses the gratuity’s percentage. All other mandatory fees and surcharges must be included in the advertised price. So a “kitchen fee” or “card surcharge” added to every bill needs to be built into menu prices.
• Delivery apps. Food delivery platforms must clearly show the specific cost to order delivery from a particular restaurant, including any added fees.
• Enforcement. The Illinois Attorney General enforces it under the Consumer Fraud Act. The act says the Consumer Fraud Act’s private-lawsuit section (Section 10a) does not apply to this rule.

Some law-firm and vendor summaries describe the restaurant rule differently. We read the enacted text; if you have a service charge in Illinois, check the act or ask a lawyer.

Other states’ fee laws (California, Colorado, Connecticut, Florida, Massachusetts, Minnesota, Virginia and more) took effect before 2027. Our restaurant fee laws page tracks them by state.

Other January 1, 2027 changes

Connecticut: paid sick leave for every employer

From January 1, 2027, Connecticut’s paid sick leave law covers employers with one or more employees in the state. In 2026 it covered employers with 11 or more. The state’s FAQ says the count is based on payroll for the week containing January 1. If you have 1–10 employees in Connecticut, set up sick leave tracking now.

California: four food additives banned

California’s AB 418 bans making, selling or offering food that contains brominated vegetable oil, potassium bromate, propylparaben or Red Dye No. 3, starting January 1, 2027. Restaurants rarely use these directly, but some baked goods, candy and drinks have. Ask your suppliers to confirm what they ship you.

Federal: new tip boxes on your 2026 W-2s

The IRS’s 2026 W-2 instructions add box 12, code TP for total cash tips reported to the employer and box 14b for the employee’s Treasury Tipped Occupation Code. These support the new federal deduction for qualified tips. The 2026 W-2s are due to the Social Security Administration by February 1, 2027. Make sure your payroll provider is ready.

Virginia: sick leave rules in progress

Virginia’s Department of Labor and Industry has published a proposed paid sick leave regulation, with public comments open through January 1, 2027. Check the department’s site for when the requirements start.

What owners should do in December

1. Update payroll before the first January shift

Set the new rates in your payroll system to start with hours worked on January 1. Update both the regular rate and the tipped cash wage. In states with a tip credit, tips plus cash wage must still reach the full minimum each pay period; make up any shortfall.

2. Put up the new posters

Most states publish a new minimum wage poster each year. Download it from your state labor department and replace the old one.

3. Do the menu math

Here is an example for a New Jersey restaurant:

• 6 non-tipped staff × 30 hours a week × $0.56 raise = $100.80 a week
• That is about $5,240 a year, before payroll taxes.
• On $40,000 a month in sales ($480,000 a year), that is about 1.1% of sales.
• A 1.1% price rise on an $18 dish is about $0.20.

Use your own numbers. Our menu price calculator and guide to menu pricing and food cost show how to spread a cost increase across the menu without a big jump on any one dish.

4. Check every price a guest sees (Illinois especially)

Look at your printed menu, website, online ordering, delivery-app listings, catering menu and receipts. If you add any fee to every bill, decide whether to build it into prices. If you charge an automatic gratuity for large parties, show the percentage wherever prices appear.

5. Plan staffing for sick leave

In Connecticut, set up accrual for every employee. Write down how staff request sick time and how you will cover shifts.

6. Ask your payroll provider about W-2 tip reporting

Confirm they will report cash tips (code TP) and tipped occupation codes (box 14b) on 2026 W-2s.

Want a second pair of eyes on where your margin goes? Our free growth check is a good start.

How WhatsTable helps

Wage increases hit every shift, so you need to see labor against sales every day, not once a month. WhatsTable’s daily P&L shows your sales and costs each day, with cash by person, so you can see what the new rates do to your margin from the first week of January.

For Clover restaurants, WhatsTable can also help bring in more sales to cover the increase: smart offers that fill slow hours (you approve each one), email and text campaigns you approve before they send, and online orders with nothing added to the guest’s bill. It’s $0 a month plus 5–10% of sales that come through WhatsTable.

See Money and daily P&L.