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The Final 2026 Federal Pay Raise: Why It Was 1.0% Instead Of The Expected 3.8%

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The final, enacted 2026 federal government pay raise for most General Schedule (GS) employees is 1.0%. As of today, December 20, 2025, this figure has been finalized and is set to take effect with the first full pay period in January 2026. This percentage represents a 1.0% across-the-board increase to base pay, with no additional increase for locality adjustments, which were frozen at 2025 levels. This decision was implemented through a Presidential Executive Order that established an "Alternative Pay Plan," overriding the much higher statutory pay increase dictated by federal law.

This 1.0% figure is significantly lower than the default raise mandated by the Federal Pay Comparability Act (FEPCA), which was calculated to be 3.8%. The final decision has sparked considerable debate among federal employee unions and advocacy groups, who argue the raise fails to keep pace with the rising Cost-of-Living Adjustment (COLA) and private sector wage growth, especially in high-cost metro areas.

Understanding the Three Conflicting 2026 Pay Raise Numbers

The confusion surrounding the 2026 government raise stems from three distinct figures that circulate during the annual pay-setting process. To understand the final 1.0% amount, it is essential to know the difference between the Statutory Default, the Congressional Proposal, and the President's Alternative Plan.

1. The Statutory Default: 3.8%

The Federal Pay Comparability Act (FEPCA) of 1970 dictates the default pay raise for federal civilian employees. This law requires that the annual adjustment be based on the change in the Bureau of Labor Statistics’ Employment Cost Index (ECI), specifically the private industry wages and salaries data for the 12-month period ending in September of the previous year.

  • The ECI Calculation: The ECI for the period relevant to the 2026 raise calculated a statutory increase of 3.8%.
  • What It Means: Under FEPCA, this 3.8% would have been the raise, divided between a base pay increase and locality adjustments, unless the President intervened.
  • The Override: Because the President determined that the full statutory increase was "inappropriate" due to national economic conditions and budgetary constraints, the President exercised the authority to implement an "Alternative Pay Plan," which overrode the 3.8% ECI figure.

2. The Congressional and Union Proposals: Up to 4.3%

While the President sets the final rate, Congress can pass legislation to enact a different, usually higher, raise. For 2026, several legislative efforts were introduced:

  • The FAIR Act: The Federal Adjustment of Income Rates (FAIR) Act, typically supported by unions like AFGE and NTEU, proposed a total pay adjustment of 4.3% for 2026. This figure is often seen as a target for fair compensation, reflecting a more aggressive effort to close the pay gap with the private sector.
  • The Pay Freeze Proposal: Conversely, some members of Congress introduced bills, such as H.R. 200 (the Federal Freeze Act), that proposed a complete pay freeze for the year.
  • The Outcome: Neither of these legislative proposals was enacted into law, leaving the President's plan to take effect.

3. The Final Enacted Raise: 1.0%

The final, official raise for most federal employees is the rate established by the Presidential Executive Order instituting the Alternative Pay Plan.

  • Base Pay Increase: 1.0% across-the-board increase, applied to the General Schedule (GS) pay table.
  • Locality Pay: 0.0% increase. The Executive Order stipulated that all Locality Pay rates would be frozen at their 2025 levels. This is a critical detail, as locality adjustments usually account for a significant portion of the total pay raise.
  • Total Raise for Most: 1.0% (Base) + 0.0% (Locality) = 1.0% Total.

The Impact of the 1.0% Raise on Locality Pay and Special Rates

The structure of the 1.0% raise, which excludes any increase to locality pay, has a disproportionate impact on employees in different geographic regions and those in specialized roles. This decision highlights the ongoing tension between national budget control and the mission of the Federal Salary Council (FSC) to close the pay gap between public and private sector workers.

Locality Pay Freeze: A Major Concern

Locality Pay is designed to adjust General Schedule salaries to better match the prevailing private-sector wages in specific metropolitan areas and regions across the country. The Office of Personnel Management (OPM) manages these pay areas.

  • The Pay Gap: By freezing locality pay rates, the government is effectively allowing the pay gap to widen in high-cost areas like the Washington-Baltimore-Northern Virginia, San Francisco-Oakland-San Jose, and New York-Newark regions.
  • Recruitment and Retention: Federal employee organizations argue that a frozen locality adjustment makes it increasingly difficult for agencies to recruit and retain highly-skilled personnel in competitive labor markets.

The Exception: Federal Law Enforcement Personnel

A notable exception to the 1.0% total raise was made for certain Federal Law Enforcement Personnel (LEP). The Executive Order included a special provision to grant these employees a total increase of 3.8% in January 2026.

  • The Breakdown: This 3.8% total was achieved through the 1.0% base pay increase combined with an approximately 2.8% additional adjustment, which OPM was tasked with implementing.
  • The Rationale: This targeted increase was intended to address specific recruitment and retention challenges within critical law enforcement roles, creating a significant disparity in the total raise received by different groups of federal employees.

How the 2026 Raise Compares to Other Federal Adjustments

It is important for federal workers and retirees to distinguish the General Schedule pay raise from other related federal adjustments, such as the Social Security Cost-of-Living Adjustment (COLA), which are calculated using different metrics.

  • Social Security COLA: The Cost-of-Living Adjustment (COLA) for Social Security and Supplemental Security Income (SSI) beneficiaries, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), was finalized at 2.8% for payments beginning in January 2026. This is a separate calculation from the ECI-based federal employee raise.
  • Military Pay Raise: The military pay raise is set through the National Defense Authorization Act (NDAA) and is often, but not always, aligned with the General Schedule base pay increase. For 2026, the military raise was also finalized at 1.0%.

In summary, the 2026 federal government raise is a complex outcome of statutory law, economic forecasts, and presidential authority. While the default statutory raise was 3.8%, the President's Alternative Pay Plan ultimately set the final, enacted rate for most General Schedule employees at 1.0%, with no increase in locality pay for the new Fiscal Year (FY).

The Final 2026 Federal Pay Raise: Why It Was 1.0% Instead of the Expected 3.8%
What is the government raise for 2026?
What is the government raise for 2026?

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