With the week-long Memorial Day congressional recess looming, President Bush signed into law an increase in the Federal minimum wage on Friday, May 25. This is the first time in a decade that the minimum wage has been raised. The wage increase was added to the most recent Iraq war funding bill.
The new law will raise the minimum wage in three $.70 increments over 26 months until it reaches $7.25 per hour. The first increase (up to $5.85) will occur this summer or to be specific, 60 days after the law takes effect. The second increase (up to $6.55) and third increase (up to $7.25) will take place one and two years respectively, after the date of the first increase.
In addition, the new law contains $4.84 billion of tax relief for small businesses to help offset the cost of the mandated wage increase to employers. These tax law changes include a three-and-a-half year extension of the Work Opportunity Tax Credit (WOTC), which gives employers tax credits for hiring individuals from one or more of nine targeted groups. Also, disabled veterans were added as a targeted group under WOTC.Back to blog list