Some Federal Employees Could Get Inflation Bonus in 2023

A draft bill in Congress is proposing paying some federal employees a 2023 inflation bonus to help offset rapidly rising inflation.

A draft version of legislation pending in Congress would provide some federal employees with an extra bonus to their pay to help combat rapidly rising inflation.

The 2023 National Defense Authorization Act (H.R. 7900) has a provision in it that would give a 2.4% bonus to Department of Defense employees who make $45,000 per year or less. The bonus, which is deemed an “inflation bonus” under the language currently in the bill, would be paid out beginning on or after January 1, 2023, and would be paid the first of each month for the entire year.

The 2.4% amount would be based on the annual rate of basic pay for eligible employees that is in effect on the first day of the applicable pay period.

The bonus would be payable to both General Schedule and Federal Wage System civilian employees at DoD. It also would be paid to members of the uniformed services who earn an annual salary of $45,000 or less.

White House Opposes the 2023 Inflation Bonus

The White House is “strongly opposed” to paying such a bonus to these federal employees. The Biden administration came out against the proposal in a policy statement issued by the Office of Management and Budget.

According to OMB, paying an inflation bonus as described in the draft legislation would “would create significant pay inequities among Federal civilian employees” and would also cause “other problems” about which OMB did not elaborate. Instead, the White House only wants a 4.6% 2023 federal pay raise for the federal workforce.

The statement reads:

The Administration welcomes a provision in the NDAA, aligned with its FY 2023 President’s Budget request, which provides a 4.6 percent pay raise to Service members. The Administration strongly opposes the limited inflation bonus that would apply only to Department of Defense civilian employees for calendar year 2023. This provision would create significant pay inequities among Federal civilian employees and creates other problems, including for the Calendar Year 2024 pay adjustment, as currently drafted. The Administration urges the Congress to support the robust government-wide civilian pay increase of 4.6 percent included in the FY 2023 Budget request.

2022 Inflation Highest Since 1981

Inflation has been rising rapidly in 2022 and its impact is being felt everywhere, whether it is at the gas pump, restaurants, or the grocery store. As of the end of June 2022, inflation for the last 12 months hit 9.1%, the highest since 1981.

The rapid increase in inflation is improving the prospects of a large 2023 COLA. However, as current federal employees often lament, the 4.6% pay raise that the Biden administration has proposed is looking much smaller in comparison.

2023 Federal Pay Raise Not Yet Finalized

Keep in mind that the 2023 inflation bonus proposed in the draft NDAA bill is still just that, a draft, and despite the proposed 2023 federal pay raise in the White House budget and reiteration of that raise in the OMB policy statement, the 2023 federal pay raise process will not be finalized until later this year. Federal employees will not know until that process plays out what their 2023 pay raise will be, and it’s possible that it still could change as the process unfolds in Washington. We will continue to keep you updated with the latest information as it becomes available.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.