If you’ve been checking your bank account and wondering why that "big" raise everyone talks about feels more like a rounding error, you aren't alone. It is official. The federal employee pay increase for 2026 is here, and honestly, it’s a bit of a mixed bag.
President Trump signed the executive order in late December 2025, and it basically locked in a 1.0% across-the-board hike for most of the civilian workforce. This isn't the 5.2% we saw back in 2024. Not even close. It is a lean year for the General Schedule (GS), but if you’re in law enforcement, there’s a much more interesting story developing.
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The 1% Reality: Breaking Down the Numbers
Most feds are looking at a flat 1.0% bump. No locality pay adjustments. No fancy math to figure out if DC gets more than Des Moines. For 2026, locality percentages are staying exactly where they were in 2025.
Why so low? The White House cited "fiscal responsibility" and a push to trim federal spending. In his alternative pay plan submitted back in August, the President made it clear that while a total freeze was on the table, the 1% was the compromise.
- Effective Date: January 11, 2026.
- First Paycheck: You'll likely see the change in late January or early February, depending on your agency's payroll cycle.
- Who gets it: GS employees, Foreign Service, and most VA medical staff.
It’s worth noting that the Federal Employees Pay Comparability Act (FEPCA) actually suggested a much higher number—roughly 3.3% plus a massive locality bump. But as anyone who has been in the system for more than a week knows, the President's "alternative plan" almost always overrides that formula. It's a bit of a quirk in the law that leaves the actual federal employee pay increase to the discretion of the executive branch.
The Law Enforcement Exception (The 3.8% Club)
Here is where things get a little better. If you’re a "front-line" law enforcement officer (LEO), you aren't just getting the 1%. You’re likely getting a 3.8% total increase.
The Office of Personnel Management (OPM) released a memo on December 31, 2025, detailing how this works. They’re using "special salary rates" to bridge the gap. Basically, they want to keep LEO pay in line with the military pay raise, which was also set at 3.8% for this year.
It’s about retention. The administration is pretty open about the fact that they need to secure the border and keep federal agents from jumping ship to local police departments that might pay better. But—and there's always a but—this doesn't apply to every single person with a badge. OPM and individual agencies like DHS and Justice had to identify specific categories that qualify.
If you're in a covered position (think CBP Officers, certain FBI agents, and some Interior Department roles), your pay table looks a lot different than the standard GS chart this month.
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What This Means for Your Retirement and Benefits
A pay raise isn't just about the cash in your pocket today. It ripples through everything. Even a small 1% federal employee pay increase changes your:
1. High-3 Calculation
Your pension is based on your highest three years of earning. Even a tiny bump moves that needle. If you're planning to retire in 2027 or 2028, this year’s "underwhelming" raise still counts toward that final average.
2. TSP Contributions
If you contribute a percentage of your pay to the Thrift Savings Plan, your contribution just went up automatically. If you're at 5%, you’re putting in 5% of a slightly larger pie. It’s a good time to check if you can squeeze another 1% into your TSP to offset the tax bite.
3. FEGLI Coverage
Life insurance (FEGLI) is tied to your basic pay. When your salary goes up, your coverage amount usually rounds up to the next $1,000 plus $2,000. It’s a small tweak, but important for your beneficiaries.
The Pay Cap Problem
We have to talk about the "salary ceiling." For senior executives (SES) and high-step GS-15s in high-cost areas like San Francisco or NYC, the federal employee pay increase might not actually reach your bank account.
Pay is capped at Level IV of the Executive Schedule. For 2026, that cap is $197,200. If the 1% raise would push your salary above that number, you’re capped. You won't see the full increase. This "pay compression" is a massive headache for the government because it means a supervisor might end up making the exact same amount as the person they manage.
Actionable Steps for Federal Employees Now
Don't just wait for the LES (Leave and Earnings Statement) to show up. There are a few things you should do to make sure you're actually getting what you're owed and making the most of the shift.
Verify your SF-50
Check your Electronic Official Personnel Folder (eOPF) in late January. You should see a new SF-50 reflecting the January 11 effective date. Look at Box 12. If you’re LEO and don’t see that 3.8% reflected (or at least the 1% base), talk to your HR rep immediately. Errors happen, especially when new special rate tables are being rolled out.
Adjust your withholdings
A 1% raise is small enough that it might actually push you into a slightly higher tax situation depending on your total household income, or it might just disappear into your state tax. Take five minutes to run your numbers through the IRS Tax Withholding Estimator.
Re-evaluate your "Rest of U.S." status
If you’ve moved recently or your duty station has changed, make sure you aren't being paid on the wrong locality table. Since locality rates are frozen at 2025 levels, the geography matters more than ever.
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Leverage other flexibilities
Since the 2026 raise is lean, look for other ways to boost your income. Agencies still have the authority to give out performance awards, recruitment bonuses, and retention incentives. If you’re in a "mission-critical" role, 2026 might be the year to negotiate a retention allowance rather than waiting for a congressional act to fix your salary.
The days of 5% across-the-board raises seem to be on pause for now. Staying informed about how these smaller adjustments work is the only way to ensure your financial plan stays on track. Keep an eye on the OPM 2026 salary tables—they are the final word on what hits your account.