By Montana’s minimum wage will increase to $11.20 per hour effective January 1, 2027, according to HRMorning. The change represents a 35-cent-per-hour increase from the current rate.
The Montana Department of Labor & Industry made the adjustment as part of the state’s annual cost-of-living review required under Montana law. The department has updated its minimum wage and overtime poster, available in English and Spanish, to reflect the new rate. Displaying the poster is optional, but the department recommends employers post it alongside required workplace notices where employees can easily see it.
Why the rate changes every year
Montana law ties the minimum wage to the Consumer Price Index for All Urban Consumers, specifically the U.S. city average for the 12-month period ending in August of the prior year. The Montana Department of Labor and Industry calculates the adjustment and announces the new rate by September 30 each year.
According to Vensure, the 2027 increase reflects a 6.2 percent CPI-U increase from the prior year. The 2026 Montana minimum wage is $10.55 per hour, and the 2025 rate was $10.30 per hour. The federal minimum wage remains $7.25 per hour, but it rarely applies in Montana because the state rate is higher.
What the increase means for payroll teams
Payroll administrators should update systems before January 1, 2027 to avoid underpayments. The overtime rate at the new minimum wage will be $16.80 per hour, calculated as $11.20 multiplied by 1.5.
Montana does not allow a tip credit. Tipped employees must receive the full state minimum wage in addition to any tips they earn. This differs from most states and from federal law, which permits employers to count a portion of tips toward the minimum wage obligation.
Montana allows a training wage of $4.00 per hour for employees under 20 years old during their first 90 consecutive calendar days of employment. The training wage does not appear to adjust annually with inflation, based on available sources. After the 90-day period ends, the employee must receive the full state minimum wage.
Employer coverage and exemptions
According to Vensure, the Montana minimum wage applies to businesses with annual gross sales of $110,000 or more. Employers with gross annual sales below that threshold are exempt from the state minimum wage but must still pay the federal minimum wage of $7.25 per hour where federal law applies.
The sources do not clearly define how gross annual sales are calculated or what happens when a business crosses the threshold mid-year. Employers with questions about coverage should contact the Montana Department of Labor and Industry directly.
Limited exemptions also exist for certain agricultural workers, domestic service workers, and outside salespersons, according to 7shifts. The specific scope of these exemptions is not detailed in the available research.
How Montana compares to neighboring states
Montana’s $11.20 rate will be significantly higher than several neighboring states. Wyoming and Idaho both use the federal minimum wage of $7.25 per hour. North Dakota and South Dakota also follow the federal rate. This means a full-time minimum wage worker in Montana will earn $11.20 per hour while the same worker in Wyoming or Idaho earns $7.25 per hour.
For a full-time Montana worker, the increase from $10.55 to $11.20 adds approximately $1,352 per year before taxes, based on a 40-hour week over 52 weeks.
| State | 2027 minimum wage |
|---|---|
| Montana | $11.20 |
| Idaho | $7.25 |
| Wyoming | $7.25 |
| North Dakota | $7.25 |
| South Dakota | $7.25 |
Compliance steps for employers
Employers should take several steps before the January 1, 2027 effective date. First, update payroll systems to reflect the new $11.20 rate for all covered employees. Second, review employee classifications to confirm which workers are covered by the state minimum wage and which may fall under an exemption. Third, notify employees of the rate change. Fourth, obtain and display the updated poster from the Montana Department of Labor and Industry.
The department recommends displaying the updated poster even though doing so is optional. The poster is available in English and Spanish.
The next rate announcement is expected by September 30, 2027, based on the CPI-U period from August 2026 to August 2027. Employers should plan for another potential increase on January 1, 2028.
Sources: HRMorning
Photo: Subminimum Wage Bill Signing (39627338430) by Seattle City Council from Seattle, CC BY 2.0
