President Trump has frozen federal civilian pay for 2027 while authorizing up to a 7% raise for the military. Here is what federal employees need to know.

President Trump has issued the alternative pay plan letter for the 2027 federal pay raise, or in this case, a pay freeze for most federal employees. He proposed keeping base pay and locality pay frozen at 2026 rates. The letter, dated August 26, 2026, states that the president has determined that “base pay and locality pay for civilian Federal employees will not change from the 2026 rates.”

Unlike last year, when Trump surprised federal employees with a 1% raise despite a budget that was silent on civilian pay, the 2027 alternative pay plan letter follows through on the White House’s 2027 budget proposal, which did not include a pay raise for federal civilian employees.

Congress has not passed legislation determining the amount of the 2027 pay raise. While Congress could presumably still override the president’s pay freeze proposal, the alternative pay plan more often than not is what becomes final when next year’s salary schedules are set via executive order in December.

Law Enforcement Personnel Will Get a 3.8% Raise

While most civilian federal employees will see no raise, the letter does authorize a 3.8% pay increase for law enforcement personnel. This mirrors the approach Trump took for the 2026 pay raise, when he directed the Office of Personnel Management (OPM) to use its special rate authority to give law enforcement a raise matching the military increase.

The letter states that OPM “shall use its statutory authority to increase 2027 compensation for law enforcement personnel by 3.8 percent.” As in 2026, this is implemented through a separate process from the alternative pay plan itself. OPM will determine which categories of law enforcement personnel are eligible for the higher raise.

Military Personnel Will Receive Up to 7% Raise

The letter also reiterates the military pay raise that was outlined in the White House’s 2027 budget proposal: 7% for those ranked E-5 and below, 6% for E-6 to O-3, and 5% for O-4 and above. The letter states:

Additionally, Trump proposed a 3.6% pay increase for uniformed service members who do not serve in the Armed Forces. 

What Is an Alternative Pay Plan?

The Federal Employees Pay Comparability Act of 1990 (FEPCA) established a two-part annual pay adjustment for General Schedule (GS) federal employees: an across-the-board base pay adjustment and a locality pay adjustment that varies by geographic area. Under the statutory formula, the locality pay increases alone would cost billions of dollars. No president has ever followed the formula since the law was enacted.

Instead, FEPCA gives the president the authority to implement an alternative pay plan if, because of a national emergency or serious economic conditions, the increases that would otherwise take effect are deemed inappropriate. The president must transmit this alternative plan to Congress before September 1 of the year preceding the adjustment. According to the letter, without this alternative pay plan, locality pay would automatically increase by an average of 20.6%, costing $26 billion in the first year alone, on top of a 3.1% across-the-board increase for the base General Schedule.

The Pay Raise Is Not the Same as the COLA

When discussing the federal pay raise, questions about the annual cost-of-living adjustment (COLA) for federal retirees often come up, and the two are sometimes confused. They are not the same thing.

The annual pay raise applies only to current federal employees and is set through the political process described above. The COLA applies to federal retirees and Social Security recipients and is determined by a formula based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA is automatic and is not subject to the actions of Congress or the president.

The official 2027 COLA will be announced in October once the third-quarter CPI-W data are released. The latest inflation data suggests the 2027 COLA could be in the range of 3.5% to 3.7%, but the final number depends on August and September data. FedSmith will provide the official COLA figure as soon as it is available. For a detailed breakdown of the differences between the two adjustments.

Full Text of the 2027 Alternative Pay Plan Letter

THE WHITE HOUSE,
Washington, August 26, 2026.

Hon. Mike Johnson,
Speaker of the House of Representatives,
Washington, DC.

Dear Mr. Speaker: I am transmitting an alternative plan for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems, and for members of the Armed Forces in January 2027.

I have determined that for 2027, base pay and locality pay for civilian Federal employees will not change from the 2026 rates.

Title 5, United States Code, authorizes me to implement alternative plans for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems if, because of “national emergency or serious economic conditions affecting the general welfare,” I view the increases that would otherwise take effect as inappropriate.

We must maintain efforts to put our Nation on a fiscally sustainable course; Federal agency budgets cannot sustain such irresponsible increases. Accordingly, I have determined that it is appropriate to exercise my authority to set alternative pay adjustments for 2027 pursuant to 5 U.S.C. 5303(b) and 5 U.S.C. 5304a.

Without this alternative pay plan, under current law, beginning in January 2027, locality pay for the civilian workforce would automatically increase by an average of 20.6 percent, costing $26 billion in the first year alone. This change would go into effect in January 2027 along with an additional 3.1 percent across-the-board increase for the base General Schedule. Such a large raise for Federal employees while most Americans still struggle with the consequences of the Biden Administration’s giant inflation spree is unacceptable and would be unfair. I have therefore decided to set at zero the pay adjustment to be made for the 2027 pay year pursuant to 5 U.S.C. 5303(b) and 5 U.S.C. 5304a. This decision will maintain fiscal responsibility without harming the Government’s ability to recruit and retain well qualified employees.

Separately, to increase recruitment and retention in critical law enforcement roles, at my direction the Office of Personnel Management shall use its statutory authority to increase 2027 compensation for law enforcement personnel by 3.8 percent. That change is part of a separate process from the establishment of this alternative pay plan under 5 U.S.C. 5303(b) and 5 U.S.C. 5304a.

I strongly support the members of our Armed Forces, who are the greatest fighting force in the world and the defenders of American freedom. We must work to rebuild our military’s readiness and capabilities by supporting our service members and their families.

Accordingly, I have determined it is appropriate to exercise my authority under section 1009(e) of title 37, United States Code, to set the 2027 monthly basic pay increase for members of the Armed Forces at 7.0 percent for grades E1 to E5, 6.0 percent for grades E6 to O3, and 5.0 percent for grades O4 and above, subject to the caps established by 37 U.S.C. 203. This decision is consistent with my Fiscal Year 2027 Budget, and is required to support the Federal Government’s ability to attract and retain well-qualified members for the Department of War and the United States Coast Guard. The adjustments described shall take effect on January 1, 2027.

Uniformed service members who do not serve in the Armed Forces also provide significant service to our national defense. Effective January 1, 2027, monthly basic pay for these service members shall be increased by 3.6 percent, as determined pursuant to 37 U.S.C. 1009(c).

Sincerely,
DONALD J. TRUMP."

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