President Trump has issued the alternative pay plan letter for 2026. In a surprise move, he has authorized a 1% 2026 federal pay raise for next year despite expectations that there would be no pay raise for federal employees.
The White House 2026 budget proposal was silent on a pay raise for federal employees which created the expectation that there would be no 2026 federal pay raise. Congress has so far not authorized a pay raise for the federal workforce through legislation so this set expectations to be that the pay plan letter would set a pay freeze for next year.
However, the president has decided to give federal employees a 1% across the board pay raise for 2026. Locality pay will not increase next year according to the letter.
The alternative pay plan letter states:
I have determined that for 2026, base pay will increase by 1.0 percent and locality pay increases will be set at zero. This adjustment shall take effect on the first day of the first applicable pay period beginning on or after January 1, 2026, and will address our ability to attract and retain a skilled and highly talented Federal workforce while charting a fiscally responsible course. (emphasis added)
This is not the first time that Trump has made a surprise move in this annual pay plan letter.
For the 2020 pay raise, he initially proposed a pay freeze but then wound up proposing a 2.6% pay raise in his alternative pay plan letter. That letter proposed no increase for 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.
Special 2026 Pay Raise for Law Enforcement Personnel
Trump also is authorizing a special pay 3.8% raise for law enforcement personnel to be in line with the pay raise being given to military personnel. The letter states:
Separately, to increase recruitment and retention in critical law enforcement roles and to ensure our great Federal law enforcement officers are treated fairly, in addition to the 1.0 percent base pay increase, at my direction the Office of Personnel Management (OPM) shall use its statutory authority to increase 2026 compensation for certain categories of law enforcement personnel by an additional amount to be in line with the 3.8 percent increase being given to military personnel pursuant to 37 U.S.C. 1009. That change is part of a separate process from the establishment of this alternative pay plan under 5 U.S.C. 5303(b) and 5 U.S.C. 5304a. Starting September 2, 2025, OPM shall consult with executive departments and agencies to identify the categories of law enforcement personnel that will be eligible for this pay increase.
What is the Significance of the Alternative Pay Plan Letter?
Issuing the pay plan letter is a required step in the annual pay raise process for federal employees in any given year unless there is an intent to implement the Federal Employee Pay Comparability Act of 1990 (FEPCA). That has never happened since the bill was passed.
This year’s alternative pay plan letter states:
Title 5, United States Code, authorizes me to implement alternative plans for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems if, because of ‘‘national emergency or serious economic conditions affecting the general welfare,’’ I view the increases that would otherwise take effect as inappropriate.
We must maintain efforts to put our Nation on a fiscally sustainable course; Federal agency budgets cannot sustain such irresponsible increases. Accordingly, I have determined that it is appropriate to exercise my authority to set alternative pay adjustments for 2026 pursuant to 5 U.S.C. 5303(b) and 5 U.S.C. 5304a.
Congress could also pass legislation to determine the amount of the pay raise. As that has not been done so far this year, and there were several opportunities where Congress could have done so in legislation that was under consideration, that is unlikely to happen for the 2025 federal pay raise.
Trump also stressed in the letter that pay for federal employees “must be based on merit and practical skill.” He wrote:
Federal employee pay must be based on merit and practical skill and aligned with the budget and my Administration’s goals of streamlining the Federal workforce and reducing Federal spending. My alternative pay plan will further my Administration’s efforts to create an excellent and efficient Federal workforce of the highest caliber while maintaining fiscal responsibility.
A full copy of the president’s 2026 alternative pay plan letter is included below.
What Is an Alternative Pay Plan?
Congress passed the Federal Employees Pay Comparability Act (FEPCA) into law in 1990. This law intended to change how pay is set each year for the General Schedule and maintain pay comparability by locality. It also called for establishing several special pay plans.
In short, FEPCA created a two-part annual pay adjustment for General Schedule federal employees. Each year, there is to be an across-the-board pay adjustment and a locality pay adjustment that varies by various locality pay areas.
The annual pay adjustment was to be an automatic adjustment based on a formula. Time has rendered this automatic adjustment irrelevant. No president has followed this formula since the law was enacted. As the formula would result in a large pay raise for the federal workforce again this year, that will not happen.
Instead, FEPCA gives the president this alternative.
If, because of national emergency or serious economic conditions affecting the general welfare, the President should consider the pay adjustment which would otherwise be required…to be inappropriate, the President shall—
“(A) prepare and transmit to Congress before September 1 of the preceding calendar year a plan for such alternative pay adjustments as he considers appropriate, together with the reasons therefor; and
“(B) adjust the rates of pay of each statutory pay system, in accordance with such plan, effective on the same day as the increase under subsection (a) would otherwise take effect.
In some years, the president will issue an alternative pay plan that only includes an across-the-board pay raise. In other years, the alternative plan includes a separate percentage for locality pay. Each locality pay area learns of the specific plan for that pay area when the Office of Personnel Management (OPM) publishes the annual pay tables.
What About Retired Federal Employees?
When discussing the federal pay raise, questions about the annual COLA for federal retirees often arise. Additionally, some people will get confused about the differences between the cost of living adjustment (COLA) for retired federal employees and the annual pay raise for current federal employees.
Remember that the COLA for retired federal employees and the annual pay raise discussed in this article are not the same thing. The COLA applies only to federal retirees whereas the pay raise only applies to current federal employees.
Additionally, the process for determining the COLA is automatic. It is not subject to politics or the actions of Congress or the president. You will either get one or not based solely on a formula that is put in place by law and determined based on the cost of living as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The pay raise is determined by a different process as noted above. The annual pay plan letter is an important part of that process where the president sets what he wants it to be for the coming year.
For additional details on the difference between the COLA and the pay raise, see What is the Difference Between the COLA and Pay Raise?.
Letter to the Speaker of the House and President of the Senate on the Alternative Plan for Pay Adjustments for Civilian Federal Employees
THE WHITE HOUSE,
Washington, August 28, 2025.
Hon. MIKE JOHNSON,
Speaker of the House of Representatives,
Washington, DC.
DEAR MR. SPEAKER: I am transmitting an alternative plan for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems in January 2026.
I have determined that for 2026, base pay will increase by 1.0 percent and locality pay increases will be set at zero. This adjustment shall take effect on the first day of the first applicable pay period beginning on or after January 1, 2026, and will address our ability to attract and retain a skilled and highly talented Federal workforce while charting a fiscally responsible course.
Separately, to increase recruitment and retention in critical law enforcement roles and to ensure our great Federal law enforcement officers are treated fairly, in addition to the 1.0 percent base pay increase, at my direction the Office of Personnel Management (OPM) shall use its statutory authority to increase 2026 compensation for certain categories of law enforcement personnel by an additional amount to be in line with the 3.8 percent increase being given to military personnel pursuant to 37 U.S.C. 1009. That change is part of a separate process from the establishment of this alternative pay plan under 5 U.S.C. 5303(b) and 5 U.S.C. 5304a. Starting September 2, 2025, OPM shall consult with executive departments and agencies to identify the categories of law enforcement personnel that will be eligible for this pay increase.
Without this alternative pay plan, under current law, locality pay would increase an average of 18.88 percent, costing $24 billion in the first year alone. This change would go into effect in January 2026 along with an additional 3.3 percent across-the-board increase
for the base General Schedule.
Title 5, United States Code, authorizes me to implement alternative plans for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems if, because of ‘‘national emergency or serious economic conditions affecting the general welfare,’’ I view the increases that would otherwise take effect as inappropriate.
We must maintain efforts to put our Nation on a fiscally sustainable course; Federal agency budgets cannot sustain such irresponsible increases. Accordingly, I have determined that it is appropriate to exercise my authority to set alternative pay adjustments for 2026 pursuant to 5 U.S.C. 5303(b) and 5 U.S.C. 5304a.
Federal employee pay must be based on merit and practical skill and aligned with the budget and my Administration’s goals of streamlining the Federal workforce and reducing Federal spending. My alternative pay plan will further my Administration’s efforts to create an excellent and efficient Federal workforce of the highest caliber while maintaining fiscal responsibility.
Sincerely,
DONALD J. TRUMP.
