How do locality pay adjustments vary by metropolitan area for 2026 projections?
Executive summary
Locality pay for 2026 would be applied as a percentage added to the GS base pay and varies by metropolitan-area locality, with higher-percentage adjustments for high-cost metros and lower ones (or the "Rest of U.S." catch-all) elsewhere; existing locality rates averaged 25.54% and the overall remaining pay disparity stood at about 24.72% in the Council’s recommendations [1]. The Federal Salary Council proposed locality comparability payments for each area and recommended modest geographic changes (e.g., adding Wyandot County to Columbus and Yuma County to Phoenix) while the Administration proposed freezing locality rates at 2025 levels as part of an alternative 2026 pay plan [2] [3] [1].
1. How locality percentages are set and why they differ across metros
Locality pay is a percentage applied to an employee’s GS base pay to make federal wages more comparable to non‑federal wages in a given area; the Federal Salary Council and Pay Agent produce recommendations based on BLS survey data and geographic delineations [1] [4]. Higher‑cost metropolitan areas such as New York or San Francisco receive larger locality percentages; lower‑cost areas or the “Rest of U.S.” receive much smaller adjustments, reflecting measurable pay disparities between federal and private‑sector pay in each locality [5] [6].
2. The 2026 recommendation vs. the Administration’s alternative plan
The Federal Salary Council’s working documents for 2026 present proposed comparability payments for each locality area and assume a base GS increase derived from the Employment Cost Index; the Council calculated a base GS increase of 3.3% using the ECI movement (3.8% less 0.5) and then layered locality comparability rates on top [1]. By contrast, the Administration’s Alternative Pay Plan announced on August 28, 2025 would implement a 1% across‑the‑board base increase and “freeze 2026 locality rates at 2025 levels,” effectively halting year‑to‑year locality increases unless the Pay Agent adopts Council changes to geographic delineations [3].
3. Geographic changes that shift who gets which locality adjustment
The Council’s working group recommended modest changes to locality area boundaries that would reassign some counties into different metropolitan localities — for example, adding Wyandot County, Ohio, to the Columbus locality and Yuma County, Arizona, to the Phoenix locality — which would change the specific locality percentage applied to affected federal employees [2]. Such reclassifications affect pay for the employees in those counties without changing the percentage values for the receiving or losing locality unless otherwise recommended [1] [2].
4. Scale and scope: number of locality areas and typical ranges
OPM and related guidance explain that there are more than 50 locality pay areas (OPM and OMB maps used to define them) that cover large metros, two entire states (Alaska and Hawaii), and a Rest of U.S. category; forty‑four locality areas center on large metropolitan areas [4] [6]. Locality rates therefore span a broad range: high‑cost metros have the largest percentage adjustments while many other areas and the Rest of U.S. are substantially lower, producing multi‑thousand‑dollar annual differences across localities over time [7] [5].
5. What this means for take‑home pay in 2026 and agency discretion
If the Council’s comparability tables were implemented, an employee’s effective 2026 raise would combine the base GS increase and that locality percentage; however, the Administration’s freeze proposal would limit increases to the 1% base and preserve 2025 locality percentages [1] [3]. Agencies retain limited flexibilities — e.g., special rates for recruitment/retention problems — that can boost pay above standard locality in targeted occupations or locations [3].
6. Competing narratives and implicit agendas to watch
The Federal Salary Council’s materials frame locality adjustments as corrective to measured pay disparities and recommend geographic tweaks to improve comparability [1]. Opposing tenor comes from the Administration’s Alternative Pay Plan that prioritizes smaller across‑the‑board growth and a locality freeze, an approach that contains labor costs but preserves existing geographic splits; this tension reflects a classic budget‑discipline vs. competitiveness tradeoff and different political priorities [3] [2].
Limitations and next steps: available sources describe the Council’s proposed comparability payments and the Administration’s freeze proposal but do not publish a final list of exact 2026 locality percentages in these documents; official finalized locality percentages and the OPM pay tables will be the definitive numbers once the Pay Agent and the President act [1] [3].