Federal Pay Increase 2026

Summary#

This bill, called the Federal Adjustment of Income Rates Act (FAIR Act), raises federal employee pay for 2026. It sets a 3.3% increase to basic pay for most statutory pay systems and for prevailing rate employees, and it raises locality pay by 1% for 2026. The broad goal is to increase federal wages for workers in 2026.

  • Main change: Basic pay rates under statutory pay systems increase by 3.3% for calendar year 2026.
  • Prevailing rate employees: Pay rates for prevailing rate workers are increased by 3.3% for fiscal year 2026, applied to rates in effect at the end of fiscal year 2025 and done without the usual wage survey step.
  • Locality pay: Locality pay percentages for 2026 increase by 1%.
  • Combined effect: For many statutory-pay employees who also receive locality pay, the two changes together equal a 4.3% increase (3.3% + 1%).
  • Timing: The statutory pay and locality changes apply for calendar year 2026; the prevailing-rate change refers to fiscal year 2026.

What it means for you#

  • Federal employees on statutory pay systems (for example, General Schedule workers): Your basic pay would be raised by 3.3% for 2026. If you also receive locality pay, that locality percentage is increased by 1%, so your total pay could rise by about 4.3% compared with 2025.
  • Prevailing rate (wage-grade/blue-collar) federal employees: Your basic pay rates as of the last day of fiscal year 2025 would be increased by 3.3% for fiscal year 2026. The bill skips the usual local wage survey process for that year.
  • Federal agencies and managers: Agencies will need to apply the new pay tables and budget for higher payroll costs in 2026. How agencies adjust budgets is not specified in the bill.
  • Taxpayers / public budgets: The federal government would likely pay more in salaries and related costs, which could affect agency budgets and overall federal spending.
  • Job seekers and hiring: Higher federal pay could change recruitment and retention compared with the private sector, but the bill does not change hiring rules or job classifications.

Expenses#

No publicly available information on a formal cost estimate or fiscal note is included with the bill text.

  • This change would likely increase federal payroll spending in 2026 because basic pay and locality pay percentages rise.
  • Higher basic pay can increase retirement and other benefits that are calculated from pay levels.
  • Agencies may need to reprogram or increase budgets to cover higher salary and benefit costs.
  • Skipping the wage survey for prevailing rate employees could simplify administration for that year but may create mismatch costs if local wages changed substantially.
  • Exact dollar amounts, budget offsets, or savings are not provided in the bill text.

Proponents' View#

  • The bill appears intended to raise pay for federal workers in 2026.
  • Supporters may argue that a uniform percentage increase helps federal wages keep pace with cost-of-living changes or inflation.
  • Increasing both basic pay and locality pay could be seen as a straightforward way to raise take-home pay for many employees.
  • Skipping the prevailing-rate wage survey for one year could be viewed as a timely way to give an across-the-board increase without delaying pay changes for survey work.

Opponents' View#

  • One concern is the added cost to federal budgets and agencies; the bill does not include a public cost estimate.
  • Another concern is that a uniform increase may not match local labor market changes; skipping the prevailing-rate wage survey could cause some local wages to lag or overshoot actual local pay levels.
  • The bill does not explain how agencies should fund the higher pay or whether any offsets are required.
  • It is unclear whether the bill affects retroactive pay, staffing levels, or other compensation elements beyond basic and locality pay.