Tipped minimum wage / Alabama

By NorseHorse. Rates in force on October 15, 2026, checked against the sources at the bottom of this page. General information, not legal advice.

What employers must pay

In Alabama, the minimum wage is $7.25 an hour. An employer can pay a tipped employee as little as $2.13 an hour in cash, as long as tips bring the total to at least $7.25. The difference, $5.12, is the tip credit.

Alabama has no state minimum wage law, so the federal $7.25 minimum and $2.13 cash wage apply to almost every restaurant and bar.

Who counts as a tipped employee: more than $30 a month in tips (federal rule).

If your cash wage plus tips comes up short of $7.25 an hour in a workweek, your employer has to make up the difference.

What changes next

No change to the Alabama minimum wage is scheduled. The rate changes only if Congress changes the federal minimum.

Tip pooling and service charges

No state rule, so federal rules apply: if the employer takes a tip credit, a mandatory pool may include only workers who customarily get tips, such as servers, bussers and service bartenders. Back-of-house staff may join only when everyone is paid the full minimum wage with no tip credit. Employers, managers and supervisors may never keep tips from a pool.

Overtime

Federal rule only: 1.5 times the regular rate after 40 hours in a week, no daily overtime. For tipped workers, overtime is figured on the full $7.25 minimum wage, so the cash wage for an overtime hour is about $5.76.

Taxes on your tips

Alabama taxes wage income, and tips are wages, so its income tax applies to your tips. Federal income tax, Social Security and Medicare still apply. The federal tip deduction can cut the income tax part: see how the No Tax on Tips deduction works.

Check a week's pay

If you are underpaid

Start by comparing your pay stubs with your own record of hours and tips. Alabama has no state agency that enforces the minimum wage, so complaints go to the U.S. Department of Labor, Wage and Hour Division: how to file, or call 1-866-487-9243.

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