New Jersey’s maximum tip credit stays at $9.87 an hour when the state’s new wage rates start on January 1, 2027, even as the minimum cash wage for tipped workers rises from $6.05 to $6.61. The state’s Department of Labor and Workforce Development announced the figures on September 29, 2026, in a press release that also sets a $16.48 minimum wage for most employees.

For restaurant servers, bartenders and other workers who get part of their pay in tips, the two numbers move in opposite directions on the pay stub: the wage the employer pays directly goes up, while the amount the employer can count from tips holds steady.

How the tip credit works

The state’s release explains the mechanism in plain terms. An employer pays a tipped worker a minimum cash wage, and the employer can count tips toward the state minimum wage, up to the maximum tip credit. If the cash wage plus tips does not equal at least the state minimum wage, the employer must pay the employee the difference.

The 2027 figures fit together that way. The minimum wage for most employees is $16.48 an hour, and the minimum cash wage for tipped workers is $6.61. Subtracting the second from the first leaves $9.87, which is the maximum tip credit. The department’s release describes the credit as “remaining at $9.87” and the cash wage as rising to $6.61 from $6.05.

What a tipped paycheck looks like in January

For a tipped worker in New Jersey, the January question is how much of the hourly pay comes from the employer and how much from customers. The employer’s share has a new floor of $6.61 an hour. Tips can fill the rest of the gap up to $9.87, and a worker whose tips fall short of that amount in the pay period still has to end up at the $16.48 minimum, because the employer must pay the difference.

The new figures take effect January 1, 2027, and employers have to be paying the $6.61 cash wage to tipped workers starting that morning.

Get the next update the morning it lands →

A simple illustration shows the effect. If tips averaged $5 an hour, the cash wage of $6.61 plus tips would come to $11.61, and the employer would owe the remaining $4.87 to reach $16.48. If tips averaged $12 an hour, the employer could count only $9.87 of them toward the minimum wage, and the cash wage plus the counted tips would reach $16.48 exactly. These amounts are examples built from the department’s figures, not numbers the state published.

The other New Jersey rates changing January 1

The same release lists several separate minimums. Seasonal workers and employees of small employers, defined as those with fewer than six employees, will earn $16.25 an hour, up from $15.23. Agricultural workers paid an hourly or piece rate will earn $15.00, up from $14.20, which the department says is the first time farm employees on those pay systems reach the $15 benchmark. Direct care staff in long-term care facilities have a separate minimum that rises by $0.56 to $19.48.

Acting Labor Commissioner Kevin D. Jarvis framed the increases in broad terms. “Fair wages are the foundation of a strong economy,” he said in the release. On the agricultural change, he called reaching the $15 benchmark “a particularly meaningful step toward ensuring equity.”

Why the credit holds while the wage rises

The credit stays flat because the cash wage and the minimum wage rise by the same amount. The department gives the minimum wage increase as $0.56 for most employees, and the tipped cash wage moves from $6.05 to $6.61, which is also $0.56. The gap between them, which is the most an employer can claim from tips, therefore stays at $9.87.

The practical effect lands on the employer’s side of the pay stub. The cash rate an employer pays a tipped worker has a new floor of $6.61 an hour from January 1, while the share of the wage that tips can cover has the same ceiling it had before.

Matching a tipped pay stub to the new rates

The free official source is the New Jersey Department of Labor and Workforce Development’s September 29 release, which lists every 2027 rate by category. The category matters, since a tipped worker, a seasonal worker and an agricultural worker each have a different figure.

In January, three numbers on the pay stub are worth comparing with the release: the hourly cash wage, which should be at least $6.61, the tips reported for the pay period, and the total hourly pay after the employer counts tips, which should reach $16.48 for most tipped employees. If cash plus counted tips falls short of the minimum, the release says the employer owes the difference.

The department’s release gives the numbers in full: a $16.48 minimum wage, a $6.61 tipped cash wage up from $6.05, and a maximum tip credit of $9.87.

More Financial Reading

• 24 Ways to Stretch a $2,087 Social Security Check
• 17 Places to Find Your Share of the $4.25 Billion States Give Back
• 17 Ways Retirees Are Tapping a Record $14.9 Trillion in Home Equity

This article was produced with AI assistance and edited for accuracy against the sources linked above.