Denver’s minimum wage is going up in the new year.

The legal minimum wage in the City and County of Denver will go up 52 cents from $18.29 an hour to $18.81 on Wednesday.

The city adjusts the minimum wage annually to help residents keep up with the rising cost of living. The local ordinance was passed in November 2019 to help keep and attract workers. The calculation is based on the Bureau of Labor Statistics inflation tracker for common basket goods known as the Consumer Price Index for Urban Wage Earners and Clerical Workers.

The metro Denver area’s costs went up 2.84% over the year, according to federal data. It’s less than the 5.8% that set 2024’s wage adjustment and nearly 9% for 2023’s adjustment.

Denver calculated the annual rate comparing the first half of 2024 to the first half of the previous year for 2025’s new minimum wage.

The Denver minimum wage for tipped workers in food and beverage businesses will go up to $15.79 an hour, as long as they earn $3.02 in tips for each hour worked.

Employers have to provide documentation to the city to prove their workers are getting $3.02 in tips per hour to get the reduced minimum wage.

The minimum wage rising can make it tougher for small businesses and restaurants already struggling with inflation, said Carly West, vice president of government affairs at the Denver Metro Chamber of Commerce. 

“Colorado businesses are struggling with compounding factors making it harder and harder to succeed in our region,” West said in an emailed statement.

More than 200 restaurants closed in Denver in the last year, West said, adding increasing costs such as the minimum wage will have an impact on labor-intensive businesses working within small margins.

“When costs rise, businesses can only adjust prices upward so much before it impacts customer behavior, and we know businesses are having to make hard decisions right now just to keep their doors open,” West added.

When the minimum wage changes, it can lead to underpayment as employers may not know about the new adjustment, the Denver auditor’s office warned. Workers who suspect they may be underpaid can report it to the Denver Labor division at denvergov.org or by calling 720-913-8050.