If you’ve been scrolling through your feed lately, you’ve probably seen some pretty wild headlines about Donald Trump and the minimum wage. There is a ton of noise out there. Some people are saying he’s the champion of the working class, while others are convinced he’s trying to gut every worker protection on the books. Honestly, the reality is a lot more complicated than a 10-second soundbite.
Basically, the idea of Donald Trump increases minimum wage sounds straightforward, but it’s rarely about a single federal number. To understand what's actually happening in 2026, we have to look at the massive shift in how the White House is handling paychecks compared to the previous administration.
The Federal Minimum Wage Reality Check
Let's get the big one out of the way. The federal minimum wage is still $7.25 an hour. It hasn't moved since 2009. While there was a lot of talk during the 2024 campaign about being "open" to a $15 minimum wage, the Trump administration has not pushed Congress to pass a blanket federal increase. Instead, the focus has shifted toward tax-based "raises" rather than mandate-based ones.
You might remember the "No Tax on Tips" proposal that dominated the trail. That's a huge part of the current strategy. The logic is that by eliminating federal income taxes on tips, service workers effectively get an immediate bump in their take-home pay without the government forcing small businesses to change their base hourly rates. It’s a "market-first" approach that critics call a gimmick and supporters call a life-saver for the service industry.
Why the Trump Minimum Wage Strategy is Different
Under the previous administration, there was a heavy push to use Executive Orders to mandate higher pay for specific groups. For example, Biden set a $15 (later adjusted for inflation to $17.75) minimum wage for federal contractors.
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What did Trump do?
On March 14, 2025, President Trump issued Executive Order 14236. This didn't just tweak the system; it revoked the Biden-era mandate for federal contractors. This is where the confusion starts. To some, this looks like a "wage cut" because it removed the $17.75 requirement. To the administration, it was about removing "harmful" regulations that they argued made government contracts too expensive and restricted competition.
Currently, the federal contractor minimum wage has largely reverted to the levels set by an older 2014 Obama-era order (Executive Order 13658), which is around $13.30 per hour for 2025. Some workers are now essentially governed by state laws, which vary wildly. If you're a contractor in a state like California or Washington, you're still seeing those high state-mandated rates. But in states that stick to the federal $7.25, the removal of the federal contractor mandate was felt immediately.
The "No Tax on Overtime" Factor
Another way the administration argues that Donald Trump increases minimum wage—or at least total compensation—is through the push for tax-free overtime. This is a massive shift in labor policy. The goal is to encourage people to work more hours by letting them keep every cent of their time-and-a-half pay.
- Workers get more take-home pay for their hardest hours.
- Businesses aren't hit with higher base labor costs.
- The IRS loses revenue, but the administration bets on economic growth to cover the gap.
It’s a different kind of math. Instead of a higher floor, they’re trying to build a higher ceiling. But for the person working 30 hours a week at a grocery store, these overtime and tip benefits might not mean much if their base pay stays at the federal minimum.
What Most People Get Wrong
People often think the President can just snap their fingers and change the minimum wage for everyone. They can't. That requires an Act of Congress. What the President can do is control what the federal government pays its own contractors and use the Department of Labor to change who qualifies for things like overtime.
During his first term, Trump actually oversaw a period where low-wage workers saw some of the fastest pay growth in decades. Supporters point to this as proof that deregulation and tax cuts work better than mandates. Critics, like the Economic Policy Institute (EPI), argue that these gains were mostly due to tight labor markets and state-level increases, not federal policy.
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There’s also the issue of the "sub-minimum wage." There was a push to end the practice of paying disabled workers less than the minimum wage, but the current administration has largely halted those efforts, favoring a "deregulation" approach that they claim keeps these workers employed. It’s a point of major friction with labor advocates.
Practical Insights for Workers and Business Owners
If you're trying to figure out how this affects your wallet or your business, here’s the bottom line:
- Check your state laws. Federal policy is moving toward a hands-off approach. States like Florida, which is on a path to a $15 minimum wage by 2026, are where the real changes are happening.
- Watch the IRS. If you're in the service industry, the "No Tax on Tips" and "No Tax on Overtime" rules are where your actual "raise" will come from. Make sure your payroll software and tax filings are updated to catch these breaks.
- Contractors be aware. If you are on a federal contract, your minimum wage protections have likely shifted from the $17+ range back toward $13.30 or even lower depending on the specific contract date.
The "Donald Trump increases minimum wage" narrative isn't about a new number on a poster in the breakroom. It's a fundamental pivot toward using the tax code rather than labor mandates to put more money in people's pockets. Whether that actually results in a "raise" for you depends entirely on what kind of job you have and where you live.
Your Next Steps
To stay ahead of these changes, you should first verify your state's current minimum wage schedule, as many have automatic increases scheduled for late 2026. If you're a business owner, consult with a tax professional specifically about the new "No Tax on Tips" implementation guidelines to ensure your employees are getting the full benefit of the policy. For workers, review your pay stubs to see if your federal withholding has changed in line with the latest executive actions on overtime.