Montana's minimum wage rises to $11.20 in 2027: what the 35 cents is worth

Montana's minimum wage goes from $10.85 to $11.20 an hour on January 1, 2027, a raise of 35 cents. The Department of Labor and Industry confirmed the figure in a notice to employers dated October 7, 2026. It applies to most hourly workers in the state, and because Montana allows no tip credit, servers and bartenders get the full $11.20 from their employer before tips.

The new rate isn't a political decision. Montana law adjusts the wage every year by inflation, and this year's math came out to $11.22 before rounding. Workers lose the two cents to the rounding rule, and those two cents are gone for good.

Where $11.20 comes from

Under Montana Code 39-3-409, the state takes the current minimum wage and raises it by the change in the consumer price index for all urban consumers (CPI-U), U.S. city average, from August of last year to August of this year. The result is rounded to the nearest 5 cents and takes effect the next January 1.

The department's letter shows the steps. The CPI-U rose 3.40%. Applied to $10.85, that's an adjustment of $0.37, for a subtotal of $11.22. The nearest nickel is $11.20, so that's the new rate.

Two cents an hour sounds trivial. At full time it's $41.60 a year. And because next year's calculation starts from the rounded $11.20, not from $11.22, the lost cents never come back. Some years the rounding works the other way, but nothing evens it out over time.

One detail in the letter: the statute says the adjustment must be made no later than September 30, and the notice is dated October 7. That doesn't change the effective date or the amount for anyone. The department's minimum wage page already lists $11.20 from January 1, 2027, and the 2027 wage and hour poster is out.

What $11.20 an hour pays in a year

At 40 hours a week, $11.20 is $448 a week before taxes, or $23,296 over the standard 2,080-hour year. Montana has a state income tax, but since 2024 the state starts from your federal taxable income. In practice that means the federal standard deduction of $16,100 shields the same dollars from both taxes, and what's left is taxed at Montana's lower rate of 4.7%. For a single filer with no other income, here's the 2026-rules picture:

These are full-year figures using 2026 tax rules, because the 2027 federal tables aren't out yet. Your employer withholds from tables, so individual checks can be off by a few dollars until you file. To add a 401(k) contribution or change the hours, use the take-home pay calculator, which runs the same math for Montana and every other state.

The 35-cent raise, before and after taxes

A full-time year at the new rate is $728 more in gross pay. The table shows where it goes.

Full time, single filer	$10.85 (2026)	$11.20 (2027)
Gross pay per year	$22,568.00	$23,296.00
Federal income tax	$646.80	$719.60
Social Security (6.2%)	$1,399.22	$1,444.35
Medicare (1.45%)	$327.24	$337.79
Montana income tax	$304.00	$338.21
Take-home per year	$19,890.74	$20,456.05
Take-home per month	$1,657.56	$1,704.67

You keep $565.31 of the $728, or about 78 cents of each new dollar: 10% goes to federal income tax, 7.65% to Social Security and Medicare and 4.7% to Montana. That's $47.11 a month, or $21.74 on a biweekly check. Honest verdict: it keeps pace with prices, roughly, and does nothing more. A raise that matches the CPI is designed to leave your buying power where it was.

Overtime moves with it. Montana requires time and a half for hours over 40 in a workweek, so the minimum overtime rate becomes $16.80 an hour.

No tip credit, no training wage

This is the part of Montana's law that matters most to restaurant workers. Federal law lets employers pay tipped workers as little as $2.13 an hour and count tips toward the rest, and most states allow some version of that tip credit. Montana doesn't. The statute sets the minimum wage "excluding the value of tips," and the department's page adds that no tip credit, meal credit or training wage is allowed. So a server in Billings or Missoula gets $11.20 an hour from the employer starting January 1, and every dollar of tips is on top of that.

There's no lower training rate for new hires either, so a first week on the job pays the same $11.20.

Who can still be paid $4.00 an hour

Montana's law has an odd leftover: a business with gross annual sales of $110,000 or less may pay $4.00 an hour. Read alone, the statute makes that sound broad. The department reads it narrowly. The $4.00 rate is only for a business not covered by the federal Fair Labor Standards Act, and even there, any employee who is individually covered by the FLSA, for example by producing or moving goods between states, must get the higher of the federal or Montana minimum, which in 2027 means $11.20.

Individual coverage reaches further than most owners think. The U.S. Department of Labor counts workers who regularly make phone calls to other states, handle records of interstate transactions or travel to other states for work. A very small shop that sells only to local walk-in customers might qualify for the $4.00 rate; most employers don't. At full time, $4.00 an hour is $8,320 a year, so if that's the rate on your pay stub, it's worth a call to the department's Employment Standards Division at (406) 444-6543.

How 2027 compares with recent years

The department's history table shows how closely the raises track inflation. The minimum was $9.20 in 2022, then jumped 75 cents to $9.95 in 2023 after the high inflation of 2022. Since then the steps have been modest: 35 cents to $10.30 in 2024, 25 cents to $10.55 in 2025, 30 cents to $10.85 in 2026 and now 35 cents to $11.20.

Among its neighbors, Montana pays well. Idaho and North Dakota use the federal $7.25, and Wyoming's own minimum is still $5.15, with employers covered by the FLSA paying $7.25. South Dakota, at $11.85 in 2026, is the only neighbor above it. Nationally the picture flips: of the 13 states raising their minimum on January 1, 2027, Montana's new rate is the lowest.

Checking your first paycheck of 2027

January 1, 2027 is a Friday. If your pay period runs across New Year's, hours worked through December 31 are owed at $10.85 and hours from January 1 on at $11.20, so the stub may show two rates. If every hour in a period that's entirely in January still shows $10.85, ask payroll first; a rate that wasn't updated in the system is the usual cause.

The new rate is a floor. If you already earn $11.50, the law doesn't require your employer to raise your pay because the minimum went up. To see what any hourly rate works out to over a year, the hourly to salary calculator does the conversion for your own hours.

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