Federal Employee Pay Raise 2027: 4.1% Proposal vs Pay Freeze Risk

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As of June 16, 2026, the 2027 federal employee pay raise has not been finalized. The FAIR Act proposes an average 4.1% raise for civilian federal employees, including a 3.1% across-the-board increase and an average 1.0% locality pay increase. However, the White House FY2027 budget request does not include a civilian federal pay raise, which means a 2027 federal pay freeze remains possible.

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For federal employees near retirement, the final decision matters for more than take-home pay. A lower raise or pay freeze could affect your high-3 average salary, which is used to calculate your FERS or CSRS pension.

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Current Status of the 2027 Federal Pay Raise

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What Is the Proposed 2027 Federal Employee Pay Raise?

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The main legislative proposal for the 2027 federal employee pay raise is the Federal Adjustment of Income Rates Act, commonly known as the FAIR Act.

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The FAIR Act proposes an average 4.1% pay increase for civilian federal employees in the calendar year 2027.

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The proposed raise includes:

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• 3.1% across-the-board base pay increase

• Average 1.0% locality pay increase

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The bill was introduced as H.R. 7480 in the House and S. 3823 in the Senate by Rep. James Walkinshaw and Sen. Brian Schatz.

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However, this proposal has not become law. The final 2027 federal pay raise will depend on the president’s alternative pay plan, congressional appropriations, and the final executive order that sets official GS pay tables.

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Is the 2027 Federal Pay Raise Approved?

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No. The 2027 federal employee pay raise is not approved yet.

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The 4.1% figure is a proposal under the FAIR Act. It is not the final raise. Federal employees should treat it as one possible outcome, not a confirmed pay increase.

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The final raise could be:

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• 0%, if a civilian pay freeze moves forward

• Lower than 4.1%, if a smaller raise is approved

• 4.1%, if the FAIR Act or similar language advances

• Another percentage, depending on the final pay plan or spending legislation

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Will Federal Employees Face a Pay Freeze in 2027?

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A 2027 federal civilian pay freeze remains possible.

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President Trump’s FY2027 budget request does not include a civilian federal pay raise. At the same time, the budget proposes military pay increases ranging from 5% to 7%, depending on rank.

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The proposed military increases include:

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• 7% for junior enlisted personnel ranked E-5 and below

• 6% for E-6 through O-3

• 5% for O-4 and above

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If civilian federal pay remains at 0%, it would be the first full federal civilian pay freeze since 2013.

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That said, a budget request is not the final decision. Congress can still include a civilian raise in appropriations legislation, and the final executive order at the end of the year will determine the official 2027 GS pay tables.

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2027 Federal Pay Raise: 4.1% Proposal vs Pay Freeze

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Why the 2027 Pay Raise Matters for Federal Employees

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For many federal employees, the annual GS pay adjustment affects monthly income. But for employees close to retirement, it can also affect lifetime retirement income.

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Your federal pension is based partly on your high-3 average salary. If your pay is frozen during one of your highest earning years, your high-3 may be lower than it would have been with a raise.

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This matters most if you are within three years of retirement.

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How Federal Pay Raises Affect Your High-3 Salary

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Your high-3 average salary is the average of your highest three consecutive years of basic pay.

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For many federal employees, the high-3 period is the final three years before retirement because pay usually rises over time through:

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• Annual pay adjustments

• Locality pay changes

• Within-grade step increases

• Promotions

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If a pay freeze happens during your final three years, your high-3 may grow more slowly. That can reduce your starting pension amount.

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FERS Pension Formula

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For most FERS employees, the FERS pension formula is: 

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High-3 Average Salary × Years of Creditable Service × Pension Multiplier

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The FERS pension multiplier is generally:

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• 1% per year for most FERS employees

• 1.1% per year if you retire at age 62 or later with at least 20 years of service

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CSRS employees use a different pension formula, but a high-3 average salary is also an important part of the calculation.

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Example: How a One-Year Pay Freeze Could Affect a FERS Pension

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This example is for illustration only. It is not an OPM projection.

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Assume a federal employee has:

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• $150,000 salary in 2026

• 25 years of creditable service at retirement

• Retirement at the end of 2029

• Standard FERS 1% pension multiplier

• No promotions or step increases included in this simplified example

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In this example, one frozen pay year lowers the high-3 average by about $5,436.

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That reduces the annual pension by about $1,359 per year.

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Over a 25-year retirement, the difference is roughly $34,000 in cumulative pension income.

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Your actual numbers may be higher or lower depending on your grade, step, locality pay, years of service, retirement date, and whether the frozen year falls inside your high-3 period.

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Does a Pay Freeze Stop Step Increase?

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No. A General Schedule pay freeze does not automatically stop within-grade step increases.

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Annual GS pay raises and within-grade step increases are separate. A pay freeze can stop the annual across-the-board increase, but employees may still receive step increases if they meet time-in-grade and performance requirements.

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That means your pay may still increase in a freeze year if you are due for a within-grade step increase.

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How the 2027 Federal Pay Raise Will Be Decided

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The 2027 federal employee pay raise will likely move through several steps before it becomes final.

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August 31, 2026: Alternative Pay Plan Deadline

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Under the Federal Employees Pay Comparability Act, federal pay is technically tied to a formula based on the Employment Cost Index.

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However, the president can override that formula by sending an alternative pay plan to Congress by August 31.

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If the administration intends to move forward with a civilian federal pay freeze, the alternative pay plan will be one of the clearest early signals.

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Fall 2026: Congressional Appropriations

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Congress can still affect the final raise by including a specific civilian federal pay increase in spending legislation.

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As of June 2026, House appropriators have not included a civilian federal pay raise in the relevant 2027 spending work, and a proposed pay-raise amendment did not advance.

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However, the appropriations process is not finished. Federal employees should continue watching for updates through the fall.

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Late December 2026: Final Executive Order

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The final federal pay tables are usually set by executive order near the end of the calendar year.

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That executive order confirms the official GS base pay and locality pay tables for the first full pay period of January 2027.

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Until that order is issued, the final 2027 federal pay raise remains uncertain.

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What Federal Employees Should Do Now

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Federal employees cannot control the final pay raise decision, but they can prepare for different outcomes.

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1. Review Your High-3 Projection

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If you are within three years of retirement, model your actual high-3 under different pay scenarios.

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Compare:

• 0% raise in 2027

• 1% raise in 2027

• 3.1% raise in 2027

• 4.1% average raise in 2027

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This can help you understand whether the final pay decision could affect your planned retirement date.

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2. Protect Your TSP Match

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If your TSP contribution is set as a percentage of pay, a frozen salary can also limit contribution growth.

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Make sure you contribute at least 5% of basic pay to receive the full federal TSP match. 

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3. Review FEGLI Premiums

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FEGLI life insurance rates can increase with age, especially for Option B coverage.

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If your pay is not increasing, rising insurance costs may take a larger share of your paycheck. This may be a good time to compare your current FEGLI coverage with private level-term life insurance.

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4. Track Step Increases Separately

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A pay freeze does not automatically stop within-grade step increases.

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Check your waiting period, performance rating, and SF-50 records to confirm whether you are due for a step increase.

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5. Avoid Making Retirement Decisions Based on Headlines

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The 4.1% raise is not guaranteed. A pay freeze is also not final.

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Before changing your retirement timeline, review your actual numbers. Your best decision depends on your high-3 window, service history, TSP balance, survivor benefit choices, FEHB needs, and tax situation.

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Conclusion

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The 2027 federal employee pay raise is still undecided.

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The FAIR Act proposes an average 4.1% raise, while the White House FY2027 budget request does not include a civilian federal pay raise. That creates a real possibility of either a pay increase or a pay freeze.

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For federal employees close to retirement, the final decision could affect more than one year of income. It may also affect your high-3 average salary and future FERS or CSRS pension.

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The key dates to watch are the August 31 alternative pay plan deadline, fall appropriations negotiations, and the final executive order expected near the end of 2026.

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Get a Clear Picture of Your Own Numbers

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Federal pay raises, pay freezes, COLA changes, TSP decisions, and retirement timing can all affect your long-term plan.

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At Federal Pension Advisors, we connect federal employees with independent federal retirement consultants who can help model your high-3 projection, TSP strategy, FEGLI costs, and retirement timeline under different pay-raise scenarios.

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Request a free 30-minute federal benefits analysis to see how the 2027 federal pay decision could affect your specific retirement plan.

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FAQs About the 2027 Federal Employee Pay Raise

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1. Is the 2027 federal employee pay raise approved?

No. As of June 16, 2026, the 2027 federal employee pay raise has not been finalized. The FAIR Act proposes an average 4.1% raise, but it has not become law.

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2. What is the proposed federal pay raise for 2027?

The FAIR Act proposes an average 4.1% raise for civilian federal employees in 2027. That includes a 3.1% across-the-board base pay increase and an average 1.0% locality pay increase.

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3. Will federal employees get a pay freeze in 2027?

A 2027 federal civilian pay freeze is possible, but not final. The White House FY2027 budget request does not include a civilian federal pay raise, but Congress can still act before the final pay tables are issued.

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4. When will the 2027 federal pay raise be finalized?

The final 2027 federal pay raise is usually confirmed near the end of the year through an executive order. The official GS pay tables typically take effect with the first full pay period of January.

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5. What is the August 31 alternative pay plan deadline?

August 31 is the deadline for the president to send Congress an alternative pay plan if the administration wants to override the automatic federal pay formula. This is often one of the most important signals for the next year’s federal pay raise.

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6. Does a pay freeze affect FERS retirement?

Yes, it can. If a pay freeze falls within your highest three consecutive years of basic pay, it may lower your high-3 average salary and reduce your future FERS pension.

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7. Does a pay freeze affect CSRS retirement?

Yes, it can. CSRS uses a different pension formula than FERS, but the high-3 average salary is still part of the CSRS annuity calculation.

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8. Does a federal pay freeze stop step increases?

No. A General Schedule pay freeze does not automatically stop within-grade step increases. Step increases follow separate time-in-grade and performance rules.

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9. Does the 2027 pay raise affect locality pay?

The FAIR Act proposes an average 1.0% locality pay increase as part of the overall 4.1% raise. However, the final locality pay adjustment will not be official until the final 2027 pay tables are issued.

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10. Should federal employees delay retirement because of the 2027 pay raise?

Not automatically. A pay raise or pay freeze can affect your high-3, but retirement timing should also consider FEHB, survivor benefits, TSP withdrawals, Social Security, taxes, and personal income needs. Employees close to retirement should model their own numbers before making a decision.

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Disclaimer

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This article is for educational and informational purposes only. It should not be considered financial, tax, legal, insurance, or retirement planning advice. Federal retirement benefits, pay rules, TSP decisions, FEGLI coverage, FEHB eligibility, survivor benefits, and tax outcomes can vary based on your agency, service history, retirement system, age, locality pay, family status, and personal financial situation.

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The 2027 federal employee pay raise has not been finalized as of June 16, 2026. Any discussion of a possible pay freeze, FAIR Act proposal, military pay raise, appropriations process, or executive order is based on information available at the time of publication and may change as new guidance, legislation, or official pay tables are released.

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Before making retirement, TSP, insurance, or benefits decisions, federal employees should review their official records, consult their agency human resources office, and speak with a qualified financial, tax, or retirement professional.

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