US Federal Employee Pay Raises and Budget Updates – 2026

Federal employees are poised to receive a 4.1% pay raise in 2026, according to legislation currently being finalized by Congress [1]. This increase comes alongside a broader federal budget that allocates $1.6 billion to worker protections, including health and safety, wages, and retirement benefits [2].

Key Budget Highlights for Federal Employees

• Pay Raise: A 4.1% increase in pay is expected for federal employees in the coming year [1].
• Worker Protections: The Department of Labor’s (DOL) budget includes $1.6 billion for protecting workers’ health, safety, wages, and retirement [2].

Texas State Employee Updates

Texas state employees will also see significant benefits in 2026. Active employees will receive substantial pay raises, and both active and retired employees will maintain stable health care costs with no premium or out-of-pocket increases for the main ERS health plan [4]. Medicare Advantage rates will be determined in August.

Retirement Fund Investment and COLA

Several billion dollars will be invested in the Employees Retirement System (ERS) retirement fund, improving its financial stability and enabling a small Cost of Living Adjustment (COLA) for retirees who have been retired for 20 years or more [4]. While not a universal benefit for all retirees, this represents progress.

Ongoing Advocacy Efforts

Despite these gains, the Texas Public Employees Association (TPEA) continues to advocate for a 13th yearly check for retirees who have not received a benefit enhancement in over two decades [4]. The TPEA is focused on growing its membership to further these advocacy efforts in future legislative sessions.

State Position Classification Plan

The State of Texas is also updating its Position Classification Plan for the 2026-2027 period, with information available regarding the distribution of state classified employees by salary [1]. This plan references the WorldatWork Salary Budget Survey 2023-2024, 50th Annual Executive Report.