Tipped minimum wage / Vermont

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 Vermont, the minimum wage is $14.42 an hour. An employer can pay a tipped employee as little as $7.21 an hour in cash, as long as tips bring the total to at least $14.42. The difference, $7.21, is the tip credit.

The tipped wage, half the minimum, is allowed only for service workers at hotels, motels, restaurants and tourist businesses. State law covers employers with 2 or more employees.

Who counts as a tipped employee: more than $120 a month in tips, for service workers at hotels, motels, restaurants and tourist businesses.

If your cash wage plus tips comes up short of $14.42 an hour in a workweek, your employer has to make up the difference.

What changes next

Vermont adjusts its minimum wage on January 1, 2027. The new amount had not been published when this page was checked on October 15, 2026. Vermont raises the rate each January 1 with inflation, by no more than 5 percent a year. The tipped cash wage stays at half the minimum.

Tip pooling and service charges

Vermont follows the federal rules: pools only among customarily tipped workers when a tip credit is taken; cooks, dishwashers and janitors only if paid the full minimum with no tip credit; managers and supervisors may never take part.

Your employer may take the card processing fee out of a card tip, as long as you still end up with at least the minimum wage.

Overtime

State overtime law exempts hotels, motels and restaurants, so the federal rule applies there: 1.5 times the regular rate after 40 hours a week, figured on the full $14.42 for tipped workers.

Taxes on your tips

Vermont 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 Vermont Department of Labor, Wage and Hour Program: 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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