Bill Proposes 4.3% 2026 Federal Pay Raise

Legislation has been introduced to give federal employees a 4.3% pay raise in 2026.

Just over two weeks into the new year, the annual political debate over the amount of the 2026 federal pay raise has already begun. Legislation has been introduced to give federal employees a 4.3% raise next year.

The Federal Adjustment of Income Rates (FAIR) Act was introduced in the House (H.R. 493) by Congressman Gerry Connolly (D-VA) and in the Senate (S. 126) by Senator Brian Schatz (D-HI). The 4.3% proposed 2026 federal pay raise would be a 3.3% base pay increase with 1% for locality pay.

Before federal employees get too excited, it is important to know that the FAIR Act is an annual tradition and has been introduced every year since 2014. It has never become law and the final federal pay raise has always ended up being lower as it meanders through the usual political process each year, but it does serve to kick off the annual political process for setting the pay raise for federal employees.

The table below shows the proposed annual pay raises in the FAIR Act and what the federal pay raise turned out to be.

YearFAIR ActActual RaiseDifference
20264.3%??
20257.4%2%5.4%
20248.7%5.2%3.5%
20235.1%4.6%0.5%
20223.2%2.7%0.5%
20213.5%1%2.5%
20203.6%3.1%0.5%
20193%1.9%1.1%
20183.2%1.9%1.3%
20175.3%2.1%3.2%
20163.8%1.6%2.2%
20153.3%1%2.3%

Based on this legislation, if history repeats itself for the 2026 pay raise, federal employees will get a raise of less than 4.3% next year, although it will be a while before we know the exact amount.

Over the summer, the Office of Management and Budget told federal agencies to plan for a 3% 2026 federal pay raise, so that is a possible number. That could obviously change, especially since that figure was proposed by the Biden administration and could be subject to change by the incoming Trump administration.

How is the Federal Pay Raise Determined?

Determining the annual federal pay raise for current federal employees is a political process. As previously mentioned, introducing the FAIR Act has become an annual ritual and marks the initial step in this process.

The next likely step will be when the White House releases its budget proposal for the upcoming year. This will normally include a proposed raise for the federal workforce.

However, due to the political nature of the process, the decision of whether there will be a federal pay raise and the amount of the raise can vary from year to year. These variations depend on the prevailing political situation at any given time, making the process quite complex.

In some years, Congress will pass annual federal pay rate adjustments in an appropriations bill. When this occurs, it usually happens in the Financial Services and General Government appropriations bill.

While this is a common occurrence, it’s important to note that there is no legal requirement that Congress must address or consider a federal employee pay raise. In many years, Congress has simply not passed legislation on the subject.

Role of FEPCA

FEPCA stands for the Federal Employees Pay Comparability Act. It established a two-part annual pay adjustment for General Schedule (GS) employees of the federal government. Under FEPCA, there is an across-the-board pay adjustment and a locality pay adjustment.

Locality pay varies by pay locality. Because of locality pay, a federal employee’s salary will vary in different areas of the country.

FEPCA also established an automatic formula to determine the annual pay raise for federal employees. Part of the reason for confusion about an annual federal employee pay raise is that every president has ignored the FEPCA formula since FEPCA was passed in 1990. It has been ignored because the cost of implementing the formula would be very expensive.

If you are a new federal employee, you may hear comments such as “If FEPCA is followed this year, we will get a 25% pay raise.” That may be a true statement but it is not relevant. Federal employees have never received a pay raise like that since the passage of FEPCA, and it will not be implemented to provide a huge pay raise next year either.

President’s Alternative Pay Plan

Instead of adhering to the FEPCA formula, the president often proposes an alternative pay raise that disregards it.

If the president determines that “because of national emergency or serious economic conditions affecting the general welfare,” a pay adjustment would be inappropriate based on FEPCA, he can propose a different figure. This frequently happens. It happens regardless of the president’s political party.

Typically, an alternative pay plan is proposed late in the year, usually in August.

In recent years, Congress has often failed to pass legislation determining the amount of any federal employee pay raise for the following year. Consequently, the president sets the raise through an alternative pay plan, usually in late August.

However, if Congress disapproves of the amount proposed in the alternative pay plan, they can still pass new legislation to determine the final amount. This is the primary objective of the FAIR Act.

Issuing an Executive Order on Pay


When the process has concluded, usually in late December, the president will issue an Executive Order specifying the federal employee rates of pay for each locality for the upcoming year.

The Office of Personnel Management (OPM) calculates the amount of the federal salary for every pay locality, and the pay tables are published shortly after the Executive Order is issued.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. 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.