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2025 Federal Pay Raise Bidding Opens at 7.4%

2025 Federal Pay Raise Bidding Opens at 7.4%

Federal Benefits News

By Ian Smith

The annual political debate over the amount of the 2025 federal pay raise has begun. The bidding process has opened at 7.4% in legislation introduced this week in both the House (H.R. 7127) and the Senate (S. 3688).

Congressman Gerry Connolly (D-VA) and Senator Brian Schatz (D-HI) introduced their annual Federal Adjustment of Income Rates (FAIR) Act which would give federal employees a 7.4% raise in 2025. This consists of a 4% base pay increase and 3.4% for locality pay. Before federal employees get too excited when they see this proposed pay raise, it is important to know that the FAIR Act has become an annual tradition for Connolly and Schatz.

Connolly has introduced the bill every year since 2014. It has never become law and the final federal pay raise has always ended up being lower as it meanders through the usual political process each year, but it does serve to kick off the annual political process for setting the pay raise for federal employees.

The table below shows the proposed annual pay raises in the FAIR Act and what the federal pay raise turned out to be.

YearFAIR ActActual RaiseDifference

How is the Federal Pay Raise Determined?

Determining the annual federal pay raise for current federal employees is part of a political process. As noted previously, introducing the FAIR Act has become an annual event and has begun to mark the first step in the annual process.  The next likely step will be when the White House publishes its budget proposal for next year. This typically contains a proposed raise for the federal workforce.

Because the process is subject to politics, this means the process for deciding on whether there will be a federal pay raise (there have been years of no raises) and what the amount will vary from year to year. The variations depend on the political situation at any given time. This is what makes the process so complex.

In some years, Congress will pass annual federal pay rate adjustments in an appropriations bill. When this occurs, it is usually done in the Financial Services and General Government appropriations bill. While this often happens, there is no legal requirement that a federal employee pay raise be addressed or considered by Congress. In many years, Congress has not passed legislation on the subject.

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