New York's Minimum Wage Hit $17 an Hour on Long Island. Here's What That Costs Your Business.

On January 1, 2026, the minimum wage for Long Island, New York City, and Westchester County went from $16.50 to $17.00 an hour. Fifty cents. If you only have one or two hourly workers, that’s probably not keeping you up at night.

But if you have eight or ten, it adds up faster than the number sounds. And there’s a second change — the exempt salary threshold — that’s more likely to catch business owners off guard than the wage floor itself.

Here’s the math.

What $17 an Hour Actually Costs You Per Worker

The standard year has 2,080 working hours (52 weeks × 40 hours). At $17.00, a full-time minimum wage employee in Nassau or Suffolk County now costs:

• Base wages: $17.00 × 2,080 = $35,360 per year
• Employer FICA (Social Security + Medicare at 7.65%): $2,705
• Federal unemployment (FUTA) on first $7,000: $420
• New York State unemployment (SUTA): roughly $500 for established employers (new employers pay around 4.025% on the first $17,600 in wages)
• Workers’ comp and disability: $1,000–$2,500 depending on your industry classification

Total annual cost of a single Long Island minimum wage worker before any benefits: roughly $40,000 to $41,000.

That’s the floor. Before health insurance, 401(k) matching, paid time off accrual, or anything else you offer.

Now run it across five employees who were previously at $16.50. The wage increase alone is $0.50 × 2,080 hours × 5 workers = $5,200 more in wages per year. Add FICA on the additional wages ($397) and you’re looking at roughly $5,600 more in total payroll cost annually — just from the $0.50 increase.

That’s not a catastrophic number, but it’s real money, and it affects your pricing, your margins, and your hiring decisions for the rest of the year.

The Exempt Salary Threshold — This One Catches People

The minimum wage isn’t the only number that changed on January 1. So did the exempt salary threshold.

Under New York law, to classify a salaried employee as “exempt” from overtime — meaning you don’t track their hours and don’t pay them time-and-a-half — you have to pay them at least a minimum weekly salary. That threshold is tied to the minimum wage and updates every year.

For 2026, the exempt salary threshold in Nassau County, Suffolk County, New York City, and Westchester County is $1,275.50 per week, or $66,300 per year.

That’s up from $1,237.70 per week ($64,350 annually) in 2025.

Go through your salaried employees right now. Anyone you’re treating as exempt who earns between $60,000 and $66,300 may no longer qualify for exempt status in New York. Misclassifying an employee as exempt when they’re not is a wage violation — and in New York, employees can recover up to six years of unpaid overtime wages. The Department of Labor audits this.

The fix is either to raise the salary above the threshold, or to reclassify the employee as non-exempt and start tracking hours and paying overtime accordingly. Neither option is free. The point is to choose intentionally before you get a complaint.

Tipped Workers on Long Island

If you run a restaurant, salon, nail shop, or any business where tipping is customary, the Long Island tipped employee rules are separate from the standard minimum wage.

For 2026 in Nassau and Suffolk County:

• Tipped food service workers: Cash wage from employer = $14.10/hour, tip credit = $2.90/hour. If an employee’s tips don’t cover the gap to $17.00, you make up the difference.
• Tipped service workers (non-food): Cash wage from employer = $14.30/hour, tip credit = $2.70/hour.

These rates apply to NYC, Long Island, and Westchester. The rest of the state uses lower numbers.

One more thing worth knowing if you have tipped staff: the federal “no tax on tips” provision from the One Big Beautiful Bill Act changed how qualified tips are reported on 2026 W-2s. The minimum wage floor and the federal tip deduction are separate issues — but if you have tipped employees, both affect your obligations as an employer this year. You’ll want to make sure your payroll provider has implemented the updated W-2 reporting requirements before year-end.

Starting in 2027, This Is Automatic

This is the last thing to factor into your planning. Beginning in 2027, the New York minimum wage will be indexed to the Consumer Price Index. It will go up automatically every year without requiring a separate legislative action.

The era of waiting to see what Albany announces is ending. Build a wage increase into your budget every January from here forward. The amounts will probably be modest in years with low inflation — but they’ll be there. Don’t get surprised by it two years in a row.

This post is for general educational purposes and does not constitute legal or tax advice for your specific situation. Minimum wage rates and exempt salary thresholds are based on New York State Department of Labor guidance effective January 1, 2026, and are subject to change. New York State requirements and federal FLSA requirements are separate and both apply. Workers' comp, SUTA rates, and other costs will vary based on employer history and classification. Consult a qualified professional before making decisions based on this content. Geiger Tax & Accounting, Amityville, NY — serving clients nationwide.