Tipped minimum wage / Indiana

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 Indiana, 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.

Who counts as a tipped employee: more than $30 a month in tips.

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 Indiana minimum wage is scheduled. Indiana's rate follows the federal minimum, so it changes only if Congress changes it.

Tip pooling and service charges

Indiana has no tip pooling rule of its own, so federal law applies: when a tip credit is taken a mandatory pool may include only employees who customarily and regularly receive tips (servers, bartenders, bussers), not cooks or dishwashers; back of house may share only if the employer pays the full minimum wage. Employers, managers and supervisors may never keep any part of employees' tips.

Overtime

Time and a half after 40 hours in a workweek; no daily overtime. For tipped workers overtime is 1.5 times the full $7.25 minus the tip credit, so at least $5.76 an hour in cash for each overtime hour.

Taxes on your tips

Indiana 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. If the numbers don't add up, you can file a complaint with the Indiana Department of Labor, Wage and Hour Division: how to file. You can also call the U.S. Department of Labor, Wage and Hour Division, at 1-866-487-9243.

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