GS Pay Raise 2025: As the year comes to a close, federal employees under the General Schedule (GS) system are looking ahead to potential changes in the GS Pay Scales for 2025. Here’s everything you need to know about the proposed adjustments, locality pay updates, and how these changes may impact your financial future.
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Will the GS Pay Scales Increase in 2025?
On August 30, 2024, the Biden Administration proposed a 2.0% overall average pay increase for federal employees in 2025. This raise is broken down into:
- 1.7% across-the-board base pay increase
- 0.3% increase for locality pay adjustments
If Congress does not enact an alternative plan, this pay adjustment will take effect on January 1, 2025. Notably, this marks the smallest pay increase proposed by the Biden administration, following a significant 5.2% increase in 2024—the largest since 1980.
Changes to Locality Pay Areas for 2025
The Federal Salary Council has recommended changes to 22 existing locality pay areas, expanding coverage to benefit approximately 15,000 federal employees. However, no new locality pay areas are being added this year. Key changes include:
- Wyandot County, OH added to the Columbus, OH locality.
- Yuma County, AZ added to the Phoenix, AZ locality.
These expansions will result in additional salary increases for employees in these regions beyond the general pay raise.
How Are GS Pay Scales Calculated?
The GS pay system incorporates three key factors:
- GS Pay Grade: Jobs are classified into 15 pay grades (GS-1 to GS-15) based on responsibilities, education, and experience. For example, a GS-2 position may require only a high school diploma, while a GS-9 might demand a master’s degree.
- GS Pay Step System: Each pay grade has 10 steps, with each step representing about a 3% increase in salary. Progressing through steps is based on tenure and performance, generally taking 18 years to move from Step 1 to Step 10 within a single grade.
- Locality Pay Adjustment: Federal employees’ salaries are adjusted based on the cost of living in their geographical area. This ensures compensation aligns with local economic conditions, benefitting workers in higher-cost regions.
Locality Adjustment Calculation
Locality adjustments are calculated using data from the Bureau of Labor Statistics, which compares federal salaries to private-sector pay within specific geographic areas.
- The U.S. Office of Personnel Management (OPM) currently manages 53 locality pay areas, covering all 50 states and U.S. territories.
- Areas outside designated localities fall under the “Rest of United States” category.
Employees can review locality adjustment rates for 2025 via the OPM’s published pay tables.
Historical Perspective on Pay Raises
While the 2.0% increase for 2025 falls short of the military’s proposed 4.5% pay raise, lawmakers are advocating for pay parity between military and civilian employees. This ongoing debate underscores the importance of equitable compensation across the federal workforce.
Why Understanding GS Pay Scales Matters
Knowing how your pay is structured helps you plan for future expenses and evaluate career opportunities. For example:
- Locality pay data can guide decisions if you’re considering a transfer to a different region.
- Accurate salary projections ensure you’re prepared for financial commitments like insurance or retirement savings.
For additional tools, such as life insurance calculators, organizations like WAEPA (Worldwide Assurance for Employees of Public Agencies) offer resources to support federal employees.
Also Read: 2025 Mileage Rates: What You Need to Know
By staying informed about the 2025 GS Pay Raise and related updates, you can better navigate changes to your compensation and make proactive financial decisions.
