Shortly before New Years Day, President Biden signed an executive order finalizing the average 2 percent pay raise for 2025. This is the last step that formalizes the pay raise for the year, which includes a 1.7 percent across-the-board increase and an average 0.3 percent boost to locality pay rates. The raise will take effect on the first full pay period in 2025. This concludes the pay raise process, which began with Biden’s proposal of a 2 percent raise in his Fiscal Year 2025 budget request in March 2024. Most recently, FMA pushed for a 4.5 percent raise for feds to maintain the traditional pay parity with the uniformed military.

The 2 percent raise for 2025 is the lowest in several years, following the 5.2 percent raise in 2024 and the 4.6 percent average increase in 2023.

Despite those two solid years, according to the Federal Salary Council, the pay gap between the federal workforce and the private sector is approximately 25 percent. FMA anticipates House Oversight and Accountability Ranking Member Gerry Connolly (D-VA) and Senator Brian Schatz (D-HI) will once again introduce the FAIR Act later this month, in the first session of the 119th Congress, calling for a larger pay raise in 2026. We will eagerly await the introduction of those bills, as well as President-elect Trump’s budget request for Fiscal Year 2026, which will propel negotiations on the pay raise for next year.

You can view the 2025 pay table, including specific locality pay regions, to determine your exact pay raise on the Office of Personnel Management’s website here.

The pay raise also affects an ever-increasing number of feds with salary compression, impacted by the pay cap. Salary compression happens when raises for employees cause them to hit their pay grade’s pay cap. While this predominantly impacted feds in high cost of living areas such as New York City, San Francisco, or the Washington, D.C., area, many other localities are affected every year. For example, Colorado Springs and St. Louis, Missouri-Illinois are among the localities feeling the pain of salary compression this year for the first time. FMA has raised the issue of salary compression and the pay cap on Capitol Hill and endorsed a legislative effort in the 118th Congress to address it.

An FMA issue brief, which we will continue to pursue in the 119th Congress, states, “This issue plays a role in recruitment and retention to the federal workforce, which already has hiring issues. If an employee is offered a promotion at a higher level, with more responsibilities, but no corresponding salary increase, will they take on the new role? Many employees who are now capped are tempted to leave the government for the private sector where there is no pay cap.” FMA will work with the Senior Executives Association and others on this critical issue.