Vermont minimum wage rises 49 cents to $14.91 on Jan. 1; unemployment tax base up $700

Vermont's minimum wage will rise 49 cents to $14.91 an hour on Jan. 1, 2027, the Department of Labor announced Nov. 9. The base wage for tipped workers goes from $7.21 to $7.46, and employers will pay unemployment contributions on up to $700 more of each worker's yearly pay.

For someone working 40 hours a week at the minimum, the new rate means $596.40 a week, up $19.60 from $576.80. The increase is about 3.4 percent. The department's announcement says the adjustment is made every year under 21 V.S.A. section 384. It does not describe how the 2027 figure was calculated.

What changes for tipped workers

Vermont lets employers pay service employees a lower hourly wage, set at 50 percent of the full minimum, as long as tips bring the total to at least the full minimum. At the new rates, tips have to cover the $7.45 an hour between the two wages. If tips fall short in a workweek, the employer must pay the difference, according to the department.

The department directs employees who believe they are not being paid correctly to its Wage and Hour Unit at 802-951-4083 or at Labor.Vermont.gov/Rights-and-Wages.

What the wage base means for employers

Employers do not pay unemployment contributions on all of a worker's pay. They pay on the first slice of each employee's wages in a calendar year, called the taxable wage base. In a second announcement the same day, the department said that slice will grow on Jan. 1, 2027, from $15,400 to $16,100, an increase of about 4.5 percent.

The change applies to any employee who earns more than $15,400 in a year. A full-time worker at the new minimum passes $16,100 in the 27th week of 2027 ($596.40 x 27 is $16,102.80). Each employee who earns at least $16,100 that year has $700 more of wages subject to the contribution.

What that costs depends on a rate the announcement does not list. The department says an employer's rate depends on the gross wages it pays, the current wage base and the employer's ranking against all other employers in the system. For scale, each percentage point of rate applied to the extra $700 is $7 per employee.

All contributions go into the state's Unemployment Insurance Trust Fund, which the department says is used only to pay benefits to unemployed Vermonters. The wage base is adjusted each year under 21 V.S.A. section 1321, and employers file quarterly wage and contribution reports with the department.