What changes at the state line
Same menu, same wok, different rules. Six things to check before you pick a zip code.
Quick answer
The big state-by-state differences for restaurants: minimum and tipped wages, liquor license systems, sales tax on prepared food, business entity fees, who runs health inspections, and local labor rules. Check all six before you sign anything.
The six things that actually differ
Wages & tip credit
Federal minimum is $7.25, but many states set their own. California is above $16 with no tip credit at all.
Liquor license systems
Some states sell licenses over the counter for a few hundred dollars. Quota states cap the count, so licenses trade privately for five to six figures.
Sales tax on prepared food
Prepared food is taxable almost everywhere, but the rate swings from 0% to over 10% with local add-ons. It changes your menu psychology: tax-inclusive pricing reads differently at 4% and at 10%.
Entity & annual fees
An LLC costs $70 in one state and $500 in another. California adds an $800 yearly franchise tax on top.
Who inspects your kitchen
State agriculture departments, county health departments, sometimes city ones. Big cities often run their own.
Local labor rules
Predictive scheduling laws, paid sick leave, meal break rules: often set by city, not state. Seattle, NYC and Chicago all add their own layers on top.
Ten states, side by side
Rounded numbers to map the landscape. Always confirm current figures with the state before deciding.
| State | Min. wage | Tipped min. | Liquor license | LLC filing |
|---|---|---|---|---|
| California | $16.50+ | No tip credit | Moderate; county caps for full liquor | $70 + $800/yr tax |
| New York | $15.50–$16.50 | $10.35–$11.00 | Pricey, via State Liquor Authority | $200 + publication |
| Texas | $7.25 | $2.13 | TABC permits, no quota | $300 |
| Florida | $14.00 | $10.98 | Quota for full bar; beer & wine open | $125 + $138.75/yr |
| Pennsylvania | $7.25 | $2.83 | Quota: often six figures | $125 |
| Illinois | $15.00 | $9.00 | Licensed by city or county | $150 |
| New Jersey | $15.50+ | $5.62 | Quota: among the priciest in the US | $125 |
| Georgia | $7.25 | $2.13 | Local licensing, moderate cost | $100 |
| Washington | $16.66+ | No tip credit | State licensing, reasonable | $200 |
| Massachusetts | $15.00 | $6.75 | Quota in most towns | $500 |
Figures rounded as of mid-2026. Wages rise most Januaries and several states adjust with inflation.
Pennsylvania, up close
A $125 LLC, federal minimum wage, a liquor license market that can cost more than your whole kitchen. Pennsylvania rewards restaurateurs who do their homework.
Read the Pennsylvania guideMore states, up close
California
NewThe biggest Asian food market in America, and the most regulated. No tip credit, $16.50+ wages, an $800 yearly franchise tax. And customer volume that forgives all of it.
Common questions
Which state is cheapest to open a restaurant in?
On pure fees and wages: southern states like Texas and Georgia, with $7.25 minimums and cheap filings. But cheap states can mean thinner spending too.
Why do liquor licenses cost six figures in some states?
Quota systems. States like Pennsylvania and New Jersey cap licenses per town or county by population, so existing licenses resell like real estate.
Do cities add their own rules on top of the state?
Constantly. Philadelphia and Allegheny County run their own health departments, NYC layers its own wage and letter-grade systems, Chicago licenses liquor city-by-city.