California minimum wage to rise in January 2026, Here's how much

The minimum wage in California will increase again in the new year.

Effective Jan. 1, 2026, minimum wage workers across the state will earn $16.90 an hour, up from the current rate of $16.50. This will put California at the second-highest statewide minimum wage in the nation, after the District of Columbia, where it's $17.95 an hour.

The minimum annual salary for exempt employees will rise to $70,304 per year in California, or about $2,700 per paycheck before deductions.

Why is the minimum wage going up?

Under California labor law, once the statewide minimum wage reached $15 an hour in 2023, the Department of Finance was required to calculate annual adjustments based on inflation. The adjustment is tied to the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, capped at 3.5% a year.

This year, the Department of Finance found that the consumer price index increased by 2.49% between July 2024 and June 2025. As a result, the minimum wage will rise by that percentage in 2026.

While the new $16.90 minimum wage will be among the highest in the nation, 50.7% of California voters voted "no" to a ballot proposition in 2024 to raise the statewide minimum wage to $18 an hour.

Who are exempt employees in California?

In California, exempt employees earn a full-time salary of at least twice the state minimum wage and perform duties in specific categories such as executive, administrative or professional roles, according to the state's Department of Industrial Relations.

Exempt status generally means these employees are not eligible for overtime pay or certain labor protections that apply to hourly workers.

Is the minimum wage increasing across the U.S.?

Jan. 1, 2025, marked a popular day for pay increases across the U.S., as 21 states and 48 cities raised their minimum wage rates, USA TODAY reported. In total, 88 jurisdictions across 23 states were set to see minimum wage hikes by the end of 2025.

Related: Fast food restaurants in California raised menu prices due to pay increase, survey found

Further wage hikes began on July 1. In California, the increase applied specifically to health care workers. Alaska follows a multi-year schedule that will raise its minimum wage annually until it hits $15 an hour in 2027.

What is the federal minimum wage for 2025?

The federal minimum wage is $7.25 an hour.

What is the living wage in California?

While the state's minimum wage is $16.50 an hour, Californians need about $12 more per hour to cover basic living expenses, according to the Living Wage Calculator, which estimates the income required for food, housing and health care while remaining self-sufficient. For an adult with no children, that's $28.72, based on figures last updated in February.

Jennifer Cortez covers education in the Coachella Valley. Reach her at [email protected].

This article originally appeared on Palm Springs Desert Sun: California minimum wage to rise to $16.90/hour in January 2026