Federal Minimum Wage Set to Hit $17.00/Hour by 2030, Phasing Out Tipped and Youth Wages

The Raise the Wage Act of 2025 is straightforward: it sets a new, aggressive schedule for increasing the federal minimum wage while systematically eliminating the separate, lower wages currently allowed for tipped employees, young workers, and people with disabilities. This isn't a small adjustment; it’s a complete overhaul of the wage floor, starting with an immediate jump to $9.50 per hour and climbing every year until it hits $17.00 per hour four years later (Section 2).

After that five-year phase-in, the minimum wage won't be fixed by Congress anymore. Instead, starting in year six, it will be automatically adjusted annually based on the percentage increase in the median hourly wage across the country, as tracked by the Bureau of Labor Statistics (BLS). Essentially, the bill aims to ensure the minimum wage keeps pace with what the middle of the labor market is earning, cutting the cord from political gridlock and making future increases predictable for both workers and businesses (Section 2).

The End of Sub-Minimum Wages

For many workers, the biggest change isn't the $17.00 rate—it's the elimination of the special carve-outs that have kept their pay lower. If you work in a restaurant, you know the "tipped minimum wage" is a fraction of the standard rate. This bill phases that out over seven years. The employer's required cash wage starts at $6.00 per hour in the first year and increases annually until it reaches $17.00 per hour in year seven. At that point, the separate tipped wage disappears entirely, and tipped employees must be paid the full standard minimum wage, just like everyone else (Section 3).

Similarly, the bill phases out the special lower wage for workers under 20 years old, which is currently around $4.25 per hour. The new youth rate starts at $6.00 an hour and increases annually by $1.75 until it catches up to the standard federal minimum wage. Once it catches up, the youth wage category is repealed, meaning everyone under 20 gets the same rate as everyone else (Section 4).

Leveling the Playing Field for Workers with Disabilities

One of the most significant equity changes involves Section 14(c) of the Fair Labor Standards Act, which currently allows certain employers (often specialized workshops) to pay individuals with disabilities less than the minimum wage. The bill phases out this sub-minimum wage over five years, requiring employers to pay at least $15.50 per hour by the end of year five. After that, these workers must be paid the full standard minimum wage (Section 6).

Crucially, the bill immediately stops the Department of Labor from issuing new special certificates to employers who weren't already using them. The Department is also required to provide technical assistance to existing employers to help them transition to the higher wage structure while maintaining employment for these workers (Section 6).

What This Means for Everyday Life

For a small business owner in a low-wage state, these mandated increases will require serious budgeting and likely lead to higher operating costs. While the increases are phased in over years, the jump to $17.00 per hour is substantial and could necessitate price increases or changes in staffing models. The bill does offer a predictable schedule, however, which helps with long-term planning.

For a server or bartender, this means a much more stable income. Instead of relying almost entirely on tips, their paycheck will include a mandatory base wage that eliminates the risk associated with slow nights or poor tips. For a young person entering the workforce, it means a higher starting wage, making entry-level jobs more valuable. The Department of Labor is required to publish notice of all upcoming wage increases in the Federal Register and on their website at least 60 days before they take effect, ensuring everyone has time to prepare for the changes (Section 5).