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The new year will come with extra money as Seattle’s minimum wage rises Wednesday, .

Starting January 1, Seattle is raising the minimum wage from $19.97/hour to $20.76/hour. The change follows the city’s minimum wage ordinance, which adjusts for inflation.

Seattle’s new rate will be $4 higher than Washington state’s new 2025 minimum wage of $16.66/hour.

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Under the updated  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  for the Seattle-Tacoma-Bellevue area to reflect inflation.

“On January 1, the temporary tip credit for small businesses will expire, as determined by the law passed in 2014,” Seattle Mayor Bruce Harrell stated. “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.”

Harrell added he will continue to talk with small businesses to identify tangible ways to make Seattle more affordable.

The minimum wage applies to all employees working within city limits, regardless of immigration status.

The  states minimum wage increases are announced during the fall of each year.

Contributing: Bill Kaczaraba and Julia Dallas, MyNorthwest; Katrina Guischard, ³ÉÈËXÕ¾ Newsradio