Minimum wage hike, gas tax increase take effect in Michigan
Michigan’s minimum wage rose to $13.73 per hour at the start of the year – more than $1 higher than last year – while the federal minimum remains $7.25 (unchanged since 2009). The state was one of 23 to increase wages in 2026 after contentious legislative and court battles. Tipped workers’ minimum is set at 40% of the full rate, or $5.49 per hour, and a temporary tax exemption on tipped wages and overtime (through the 2028 tax year) is expected to save some workers up to about $1,500 annually. Several tax changes also took effect: the state gas tax rose from $0.31 to $0.52 per gallon (with the 6% sales tax on gasoline removed), expected to generate roughly $1.8 billion for roads, and a new 24% wholesale marijuana excise tax (on top of existing 10% excise and 6% sales taxes) is projected to raise about $420 million for road funding. Nationally,Michigan’s wage sits near the middle of state rates,with D.C. highest at $17.95 and some states still below the federal minimum.
Minimum wage hike, gas tax increase take effect in Michigan
(The Center Square) – Starting in the new year, the minimum wage in Michigan is now $13.73 per hour. That is up more than $1 over last year’s minimum wage.
Nationally, the federal minimum wage remained at $7.25 per hour. The most-recent adjustment of that wage was in 2009, making this the longest period of Congress not updating the federal minimum wage since it was first enacted in 1938.
In 2026, Michigan was one of 23 states that saw an increase in its minimum wage. That increase came only after great turmoil, both in the state legislature and the courts.
Michigan’s wage ranks average nationally, with Washington, D.C. leading the nation at $17.95 per hour and states like Georgia or Oklahoma coming in at even lower than the federal minimum. In those instances, the federal minimum wage takes precedence in most jobs over the state minimum wage.
In Michigan, the tipped employee rate of hourly pay is 40% of the full minimum wage. That means it increased to $5.49 per hour.
On January 1, no tax on tipped wages and overtime pay also went into effect in Michigan. The deduction will only be available through the 2028 tax year and is expected to save certain tipped workers upwards of $1,500 per year on their state and federal taxes.
A number of taxes also went into effect in Michigan in the new year.
In 2026, consumers will likely notice an increase in gas prices as the state gas tax rises from $0.31-per-gallon to $0.52-per-gallon. That increase was passed as a part of the state’s budget, though it did also remove a 6% sales tax on gasoline.
That said, the increase is still expected to raise about $1.8 billion for road funding in Michigan.
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Additionally, a new 24% wholesale marijuana excise tax went into effect at the beginning of the year. It will stack on top of a 10% excise tax and 6% sales tax that are already in place.
Despite widespread pushback from the marijuana industry, this tax was passed as part of the state’s budget. Legislators anticipate it will raise approximately $420 million for roads.
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