Update: President Trump issued his alternative pay plan letter on August 28, 2025.
President Trump is expected to issue his annual alternative pay plan letter before the end of August. It is widely expected that he will propose no raise for federal employees in 2026.
Why is this the case? The White House’s 2026 budget proposal did not mention a federal pay raise. It did, however, propose a 3.8% raise for the military, so presumably if the president wanted a pay raise for the federal workforce it would have been mentioned in the budget.
What is significant about August and the alternative pay plan letter? The answer is FEPCA.
What is FEPCA?
FEPCA stands for the Federal Employees Pay Comparability Act.
FEPCA established a two-part annual pay adjustment for General Schedule (GS) federal employees. This adjustment includes an across-the-board pay increase and a locality pay adjustment. Locality pay varies depending on the employee’s pay locality, resulting in a salary that can differ based on geographic location.
FEPCA also introduced an automatic formula for determining the annual pay raise for federal employees. However, part of the confusion surrounding annual federal employee pay raises stems from the fact that the FEPCA formula is often disregarded.
If you are a new federal employee, you may encounter statements like, “If FEPCA is followed this year, we will receive a 25% pay raise.”
While this statement may be true, it is not relevant. Federal employees have never received a pay raise of that magnitude since the passage of FEPCA, and it is unlikely to be implemented next year to provide a significant pay increase.
What is an Alternative Pay Plan?
Instead of implementing the FEPCA formula, the president can, and often does, propose an alternative pay raise that ignores the FEPCA formula. The law gives him this option.
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.
The alternative pay plan is almost always released late in the year, typically in August and often in the last week of August.
What occurs most often is that Congress does not pass legislation on the amount of any federal employee pay raise for the next year. When that happens, the president then sets the amount of the raise through an alternative pay plan.
Of course, if Congress does not like the amount of the raise in the alternative pay plan, it can still pass new legislation determining the final amount.
What Pay Raises Did President Trump Propose in the Past?
When the alternative pay plan letters were issued during his first administration, these are the federal pay raise amounts that then President Trump proposed:
| Proposed | Final | |
| 2018 | 1.9% | 1.9% |
| 2019 | None | 1.9% |
| 2020 | 2.6% | 3.1% |
| 2021 | 1% | 1% |
There were some unusual events that took place surrounding some of the pay raise proposals during those years.
In 2019, Trump proposed a pay freeze, but Congress eventually overrode that proposal with legislation that authorized the 1.9% federal pay raise.
In 2020, Trump initially proposed a pay freeze but in a surprising turnaround proposed the 2.6% pay raise when his alternative pay plan letter was released. His proposal was to not increase locality pay, but in the final pay raise that became law, 0.5% was included for locality pay bringing the total average pay raise to 3.1% that year.
For the 2021 raise, no alternative pay plan letter was issued in August 2020 because Trump transmitted his alternative pay plan for calendar year 2021 to Congress on February 10th, 2020. His plan was to increase federal pay rates by 1% in 2021.
What Happens Next?
Could we see another surprise this year? It is certainly possible. Perhaps despite the anticipation of a pay freeze, Trump will reverse course as he did in 2020 and recommend a pay raise for next year when he issues his alternative pay plan letter.
Congress could get involved and authorize its own pay raise via legislation. A bill was already introduced earlier this year proposing a 4.3% raise, but it has never become law in any of the years it has been introduced in the past and I don’t think this year will be an exception.
Congress could set another pay raise in separate legislation. This seems unlikely given the slim Republican majority in Congress that will presumably follow the president’s proposed raise, however, if Congress passes an appropriations bill for next year, a pay raise for the federal workforce is the kind of thing that could get inserted into the bill without raising significant objections since these massive spending bills are generally considered “must pass” bills to avoid a government shutdown.
Regardless of what happens with the 2026 federal pay raise, we will keep you updated with all the details as soon as they become available.
