The minimum wage in New York state is set to increase by 50 cents on Jan. 1, 2025.

The state’s minimum wage will increase from $16 an hour to $16.50 per hour in New York City, Long Island and Westchester County. For the rest of the state, it will increase from $15 to $15.50 an hour.

The adjustment is part of an agreement made in 2023 by Gov. Kathy Hochul and the state Legislature to index minimum wage to inflation. The legislation dictates that the minimum wage will increase by another 50 cents in 2026 and then increase annually starting in 2027 at a rate determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the Northeast Region, a regional measure of inflation. However, the minimum wage does not increase if there is an increase in unemployment.

“Putting money back in your pockets has been the focus of my first three budgets, and that includes increasing minimum wage for the lowest earners across the state,” Hochul said in a statement Tuesday. “With rising costs of living, this increase will help to lighten the burdens of inflation for New Yorkers while providing businesses with the time needed to adjust.”

The federal minimum wage in the United States has stayed at $7.25 per hour since 2009, but states and some localities can set higher amounts.

“In this current era of inflation and rising costs, every cent counts for all New Yorkers, especially workers who earn minimum wage,” New York state Department of Labor Commissioner Robert Reardon said in a statement. “By gradually increasing wages for the lowest earners, we are ensuring businesses can adjust to the change while also helping more families make ends meet.”