The 2027 federal pay raise would be set at 4.1% if legislation introduced this week were to become law.
The Federal Adjustment of Income Rates (FAIR) Act was introduced in the Senate (S. 3823) by Senator Brian Schatz (D-HI) and in the House (H.R. 7480) by Congressman James Walkinshaw (D-VA). The bill has been introduced annually since 2014 and was a tradition that was started in part by former Congressman Gerry Connolly (D-VA).
In a recent article, I noted that Walkinshaw had assumed sponsorship of the 2025 FAIR Act after Congressman Gerry Connolly’s passing and predicted that the annual tradition would continue. However, I thought the bill would get introduced sooner than it was this year.
The bill has never become law, and it is doubtful that it will this year either; however, it serves as the starting point for the annual political debate about next year’s pay raise for federal employees.
For 2027, the bill proposes a total 4.1% federal pay raise. 3.1% would be the base pay increase, and another 1% would go towards locality pay.
The FAIR Act always proposes a raise that is higher than what federal employees would be likely to get otherwise. This table shows the historical discrepancy between the bill’s proposed raises and the actual annual pay raises:
| Year | FAIR Act | Actual Raise | Difference |
|---|---|---|---|
| 2027 | 4.1% | ? | ? |
| 2026 | 4.3% | 1% | 3.3% |
| 2025 | 7.4% | 2% | 5.4% |
| 2024 | 8.7% | 5.2% | 3.5% |
| 2023 | 5.1% | 4.6% | 0.5% |
| 2022 | 3.2% | 2.7% | 0.5% |
| 2021 | 3.5% | 1% | 2.5% |
| 2020 | 3.6% | 3.1% | 0.5% |
| 2019 | 3% | 1.9% | 1.1% |
| 2018 | 3.2% | 1.9% | 1.3% |
| 2017 | 5.3% | 2.1% | 3.2% |
| 2016 | 3.8% | 1.6% | 2.2% |
| 2015 | 3.3% | 1% | 2.3% |
How is the Federal Pay Raise Determined?
In 2026, federal employees got an overall average 1% pay raise with no locality pay increase. That turned out to be something of a surprise since early indications last year were that the White House would not recommend a pay increase for the federal workforce.
When it was all said and done, some federal employees in law enforcement got a higher raise (3.8%) to match what members of the military got this year.
Since it began being introduced in Congress, the FAIR Act has usually been the first formal proposal put forth for next year’s raise. 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. It did not do so last year, so it was widely assumed this meant that federal employees were unlikely to get a pay raise in 2026.
The next step in the process typically comes in August with the release of the president’s alternative pay plan letter. It formally outlines the president’s desired pay increase for the following year.
Because of 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.
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, so it is determined by the president in those instances.
The process typically concludes in December when the president issues an executive order finalizing the pay raise. The Office of Personnel Management (OPM) will issue revised annual pay tables shortly thereafter.
