What Is the President’s Alternative Pay Plan?

The President’s alternative pay plan is the legal mechanism a president uses each year to override the automatic federal pay raise formula and set a smaller increase for General Schedule employees instead. Every president since the Federal Employees Pay Comparability Act took effect in 1994 has used it. For 2026, President Trump used this authority to set a 1.0 percent across-the-board base pay increase and freeze locality pay at 2025 levels, producing the smallest federal raise since 2021.¹

What the Plan Is and Where It Comes From

Two provisions of the U.S. Code give the President this authority. 5 U.S.C. § 5303(b) covers the across-the-board base pay adjustment that applies uniformly to every General Schedule grade and step. 5 U.S.C. § 5304a covers locality pay, the geographic supplement that varies by metro area. Together, they let the President replace both pieces of the annual raise with figures the administration chooses.²

The statute frames this as an emergency power. The President can invoke it only “because of national emergency or serious economic conditions affecting the general welfare.” In practice, that language has proven elastic enough for every administration to use routinely, whether or not the economy is in crisis. Justification letters typically cite budget deficits, spending constraints, or general fiscal responsibility. Before deciding the default is “inappropriate,” the President is required to consider a specific list of indicators, including the Consumer Price Index, unemployment rate, gross national product, Employment Cost Index, and the federal budget deficit. The statute does not require the indicators to point in the same direction.²

Why Every President Overrides the Default

The gap between the default formula and what employees actually receive is large, and that is why the override has become an annual ritual rather than an emergency measure.

Under 5 U.S.C. § 5303(a), the automatic base raise equals the 12-month change in the Employment Cost Index minus half a percentage point. The Bureau of Labor Statistics reported that civilian compensation costs rose 3.4 percent for the 12 months ending December 2025, giving a sense of the scale of the default increase.³

Locality defaults are more dramatic. The Federal Salary Council calculates a pay gap by comparing General Schedule base salaries with private-sector pay for similar work in each metro area. As of March 2024, the overall weighted pay gap stood at 56.57 percent. If the default locality formula ever took full effect, it would roughly double locality supplements overnight. No president has been willing to absorb that cost.⁴

The August 31 Deadline

The alternative plan must reach Congress before September 1 of the year preceding the raise. Miss that date and the default formula takes effect automatically, requiring the larger increases the administration has no power to stop. The plan is transmitted as a letter to congressional leaders explaining the President’s proposed numbers and the reasons for departing from the default.²

For 2026, President Trump issued the alternative plan on August 28, 2025, three days before the deadline. It announced a 1 percent base increase, froze locality rates at 2025 levels, and directed OPM to use separate special pay authorities to give certain law enforcement employees an additional 2.8 percent, bringing their total closer to the 3.8 percent military pay raise.⁵

The August number is not always final. Between August and December, Congress can weigh in through the appropriations process, and the final figures sometimes shift before the President signs the executive order that makes them law.

What the 2026 Plan Means for Your Paycheck

A federal raise has two moving parts. Base pay is a flat percentage applied uniformly to every General Schedule employee from GS-1 through GS-15, regardless of duty station. Locality pay is an additional percentage that varies by metro area, so a federal employee in San Francisco gets a larger supplement than one in rural Alabama. In 2026, locality percentages range from 17.06 percent to 46.34 percent across 58 defined locality pay areas.⁶

For 2026, only the base component moved. Because the alternative plan froze locality rates at 2025 levels, no employee received a locality increase this year. The geographic definitions for 2026 are unchanged from the prior year, so if your duty station’s locality area did not change, your locality percentage is exactly what it was in 2025.⁷

President Trump signed Executive Order 14368 on December 18, 2025, authorizing the 1.0 percent across-the-board increase and confirming the locality freeze.⁸ OPM then published updated pay tables for every grade, step, and locality area. The 2026 General Schedule salary tables are on OPM’s website.⁹

New rates took effect on the first day of the first pay period beginning on or after January 1. For 2026, that was January 11, so most employees saw the adjusted pay in their late-January paychecks.¹⁰

Who the Alternative Pay Plan Doesn’t Cover

The plan applies to General Schedule employees and a few related statutory pay systems, such as the Foreign Service schedule. Several large groups of federal workers operate under different rules.

Members of the Senior Executive Service do not receive locality pay at all. Their salaries fall within a range set by reference to the Executive Schedule. In 2026, SES basic pay runs from $151,661 to $228,000 for agencies with certified performance appraisal systems, or up to $209,600 for those without certification. SES raises flow from the same executive order but are not calculated the same way as General Schedule increases.⁶

Blue-collar federal workers under the Federal Wage System, also called Wage Grade employees, get pay adjustments based on local prevailing wage surveys rather than the General Schedule formula. For fiscal year 2026, a continuing resolution capped their increases at 1.0 percent while also setting a floor that prevents their raise from falling below what General Schedule employees in the same location received. Lead agencies calculate both figures and apply whichever is higher.¹¹

Can Congress Change the Number?

Yes. The President proposes, but Congress can override. The annual Financial Services and General Government appropriations bill is the traditional vehicle. When the bill is silent on federal pay, it effectively endorses the President’s numbers. When it includes specific language directing a different percentage, that language controls.

In practice, Congress rarely overrides the alternative plan outright. More often, the final raise reflects a negotiation: the administration sets a number in August, lawmakers signal preferences during appropriations, and the December executive order reflects whatever consensus emerged. For 2026, Congress did not override the 1 percent proposal, and the executive order implemented it as originally planned.⁸

1
U.S. Office of Personnel Management. January 2026 Pay Adjustments
2
Office of the Law Revision Counsel. 5 USC 5303 – Annual Adjustments to Pay Schedules
3
U.S. Bureau of Labor Statistics. Employment Cost Index Summary – 2025 Q04 Results
4
U.S. Office of Personnel Management. Federal Salary Council Recommendations for 2026
5
U.S. Office of Personnel Management. 2026 Special Rates for Certain Law Enforcement Personnel
6
Federal Register. January 2026 Pay Schedules
7
U.S. Office of Personnel Management. Locality Pay Area Definitions
8
Federal Register. Executive Order 14368 – Adjustments of Certain Rates of Pay
9
U.S. Office of Personnel Management. Salary Table 2026-GS
10
National Finance Center. Supersede Annual Pay Raise 2026
11
U.S. Office of Personnel Management. Fiscal Year 2026 Prevailing Rate Pay Adjustments