Federal Pay Raise 2025: When and How It Affects Government Employees

As the new year begins, federal government employees are eagerly anticipating the upcoming pay raise, a crucial adjustment that reflects the changing economic conditions and locality-specific costs. Here’s a detailed look at when the federal pay raise takes effect in 2025 and how it impacts government employees.

The Pay Raise Timeline

The federal pay raise for 2025 is set to take effect with the first full pay period of the new year. For most federal employees, this means the pay raise will be reflected in their paychecks starting from the pay period that begins on January 14, 2025. Employees typically receive their pay about a week to 10 days after the start of the pay period, so they can expect to see the impact of the raise in early February 2025.

Locality Pay Adjustments

The federal government's General Schedule (GS) pay system is not uniform across the country; it is adjusted based on the local private sector salary rates in various regions. This locality pay component is crucial because it ensures that federal employees in different areas receive salaries that are more in line with the local cost of living and private sector wages.

In 2024, several changes were made to locality pay tables, including the addition of new localities such as Fresno, CA, Reno, NV, Rochester, NY, and Spokane, WA. These changes expanded the boundaries of prior localities, benefiting around 33,300 employees by moving them into areas with higher pay rates. The December executive order for 2025 will set the exact figures for each locality, based on findings of pay gaps in over four dozen areas.

How Locality Pay is Determined

Locality pay is determined through comparisons of local private sector salary rates, not by the cost of living. This means that an individual's pay rate is based on where they work, rather than where they live. The Federal Salary Council plays a key role in reporting pay gaps in various areas, highlighting regions where the gaps are largest, such as San Francisco, New York, Seattle, Washington, D.C., and Los Angeles.

Within Grade Increases

Apart from the annual pay raise, federal employees are also eligible for within-grade increases (WGIs) as they gain experience and performance ratings. For GS employees in permanent positions, these increases are possible after specified waiting periods: 52 weeks for advancement to steps 2-4, 104 weeks for advancement to steps 5-7, and 156 weeks for advancement to steps 8-10. This system ensures that employees are rewarded for their continued service and performance.

Impact on Employees

The pay raise and locality adjustments are significant for federal employees as they help maintain the purchasing power and competitiveness of federal salaries. Given the varying costs of living across different regions, these adjustments are crucial for ensuring that federal employees can afford to live and work in their assigned areas without financial hardship.

For example, employees in high-cost areas such as the San Francisco Bay Area or New York City will see substantial increases to help them cope with the local cost of living. This not only improves their financial stability but also helps in attracting and retaining top talent in the federal workforce.