New Seattle minimum wage, non-taxable tips for 2025 announced

Starting January 1, 2025, all businesses in Seattle, regardless of size, will be required to pay employees a minimum wage of $20.76 per hour. This new rate, announced on Thursday, marks an increase from the current 2024 wage of $19.97 per hour for large employers and small employers who do not contribute at least $2.72 per hour towards employee medical benefits or where employees do not earn at least $2.72 per hour in tips. Small employers who meet these criteria currently pay $17.25 per hour.

Under the updated Wage Ordinance, small businesses will no longer be allowed to count customer tips or payments towards medical benefits as part of the minimum wage. The ordinance mandates annual adjustments to the minimum wage based on the Consumer Price Index (CPI-W) for the Seattle-Tacoma-Bellevue area to reflect inflation. The minimum wage applies to all employees working within city limits, regardless of immigration status.

Wage debate: Small business vs. worker pay

Friday, Seattle Mayor Bruce Harrell released the following statement after the Office of Labor Standards announced the 2025 minimum wage increase and structure:

Seattle has one of the highest minimum wages in the country – this is a good thing for workers, a good thing for our overall economy, and something we should take pride in. As one of the leading members of the original team who developed Seattle’s groundbreaking minimum wage legislation, my mission is the same now as it was then – ensuring Seattle is both a great place for workers and a great place for small businesses.

On January 1, the temporary tip credit for small businesses will expire, as determined by the law passed in 2014. While this is the right thing for wage fairness, we recognize it will present a significant change for many small businesses who are still recovering from the impacts of the pandemic and the resulting record inflation. Our office convened discussions to help address the concerns of all stakeholders. As the tip credit expires, we are committed to aggressively addressing many of the pressures facing small restaurants moving forward – from public safety to inflation, insurance, and a wide array of other cost pressures, including best practices in addressing the absence of a tip credit.

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Harrell said that he will continue to talk with small businesses to identify tangible and actionable ways for Seattle to be made more affordable.

For assistance with compliance, businesses can contact Office of Labor Standards at 206-256-5297.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here.