Short answer: In Michigan, employers can pay tipped workers a cash wage of $5.49 an hour, as long as tips bring them up to the $13.73 minimum wage. The most an employer can count from tips, the tip credit, is $8.24 an hour.
Michigan tipped wage at a glance
| Michigan | |
|---|---|
| Minimum wage | $13.73 an hour |
| Cash wage for tipped workers | $5.49 an hour |
| Maximum tip credit | $8.24 an hour |
| Who counts as a tipped employee | Federal rule: someone who regularly gets more than $30 a month in tips |
| In force since | 1 January 2026 |
The federal tipped minimum is $2.13 an hour with a $5.12 tip credit toward the $7.25 federal minimum wage. Where a state sets a higher figure, the higher one applies.
An example week
A server works 30 hours. The employer pays at least 30 x $5.49 = $164.70 in cash wages. To reach the minimum wage of 30 x $13.73 = $411.90, the server's tips must add up to at least $247.20. If they make less in tips that week, the employer must pay the difference.
Upcoming changes
1 Jan 2027: $15.00, tipped cash wage $6.30 (42%), then yearly inflation adjustments.
Local rates and exceptions
Tipped cash wage rises 2 points a year to 50% of the minimum by 2031. Applies to employers with 2+ employees.
Tip pools and who keeps the tips
The Michigan Department of Labor pages I could open do not describe tip pools, so the federal rule applies: managers and supervisors cannot take part in a pool, and kitchen staff can only share if your employer takes no tip credit.
Federal FLSA: employers, managers and supervisors may not keep any part of employees' tips. A mandatory tip pool may include only customarily tipped staff when a tip credit is taken; if the full minimum wage is paid, back-of-house staff may share the pool.
To share a pool fairly by hours or points, use the tip split calculator. To work out what a server owes support staff, use the tip-out calculator.
Who owns the tips
Federal law says tips belong to you and your employer cannot keep any part of them. Michigan lets your employer pay the lower tipped rate only if you are told about the tip rules and you receive and report your tips.
Can card fees come out of tips?
I could not confirm a Michigan rule on card fees, so the federal position applies: an employer may subtract only the card company's actual percentage fee from a card tip.
Income tax on tips in Michigan
Yes, Michigan taxes tips as income at 4.25 percent, with a temporary deduction. Public Act 24 of 2025 (signed 7 October 2025) lets you deduct the same qualified tips you deduct on your federal return, for tax years 2026, 2027 and 2028 only. It is not available for tax year 2025.
Other rules
- Tipped workers must be paid at least the full minimum wage once tips are counted, so keep a record of the tips you report each pay period.
- Overtime is due at 1.5 times your regular rate after 40 hours in a week.
The agency in charge is the Michigan Department of Labor and Economic Opportunity, Wage and Hour Division.
Tips and federal income tax
From 2025 to 2028, up to $25,000 of qualified tips a year can be deducted from federal taxable income. See the no tax on tips calculator for who qualifies and what it saves.
Taking tips by card
Customers carry less cash. A personal QR code lets them tip you by card, Apple Pay or Google Pay from their own phone, with no app to install. See QR code tip jars by job.
Sources
- US DOL WHD, Minimum Wages for Tipped Employees (revised 1 Jul 2026)
- US DOL WHD, State Minimum Wage Laws (updated 1 Jul 2026)
- Minimum Wage & Overtime
- Minimum Wage and Overtime FAQ
- Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act
- New Deductions for Qualified Overtime Compensation and Qualified Tips
Checked in October 2026 against the sources above. Wage rates change, often on 1 January and 1 July; check the state labor department before relying on a figure. This is general information, not legal advice.
Common questions
What is the tipped minimum wage in Michigan in 2026?
In Michigan, employers can pay tipped workers a cash wage of $5.49 an hour, as long as tips bring them up to the $13.73 minimum wage. The most an employer can count from tips, the tip credit, is $8.24 an hour.
Does Michigan allow a tip credit?
Yes. Employers can count up to $8.24 an hour of tips toward the $13.73 minimum wage.
What happens if my tips do not make up the minimum wage?
When an employer pays a tipped cash wage, it must make up any shortfall so that your cash wage plus tips is at least the full minimum wage for the hours you worked.
Can my employer or manager keep part of my tips?
No. Under federal law, employers, managers and supervisors may not keep any part of employees’ tips, including through a tip pool.
Is the Michigan minimum wage going up?
1 Jan 2027: $15.00, tipped cash wage $6.30 (42%), then yearly inflation adjustments.
Can my employer take card fees out of my tips in Michigan?
I could not confirm a Michigan rule on card fees, so the federal position applies: an employer may subtract only the card company's actual percentage fee from a card tip.
Does Michigan tax tips?
Yes, Michigan taxes tips as income at 4.25 percent, with a temporary deduction. Public Act 24 of 2025 (signed 7 October 2025) lets you deduct the same qualified tips you deduct on your federal return, for tax years 2026, 2027 and 2028 only. It is not available for tax year 2025.
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