How locality pay actually works

It is a labor-market adjustment, not a cost-of-living one

Locality pay exists because of the Federal Employees Pay Comparability Act of 1990, which set out to close the gap between federal and non-federal salaries in the same labor market. The comparison is against what other employers in that region pay for similar work, measured by the Bureau of Labor Statistics. It is not a measure of what housing, food or childcare cost there.

The practical consequence runs through this whole site: an area can pay a large adjustment and still leave you with less, because a strong private labor market and expensive living usually travel together but not in the same proportion.

Your duty station decides, not your address

Locality follows the official duty station — the place you are assigned to report to. Living in a cheaper county nearby does not reduce your pay, and living in an expensive one does not raise it. Remote and telework arrangements are the common source of confusion here, because the rules depend on how the position is formally documented rather than on where you happen to open a laptop.

Steps, and the waiting periods between them

Within a grade, step increases come on a fixed schedule as long as performance is acceptable: one year each for steps 2 through 4, two years each for steps 5 through 7, and three years each for steps 8 through 10. Reaching step 10 from step 1 therefore takes eighteen years without a promotion.

A promotion to a higher grade restarts that clock. That is worth knowing when a promotion lands shortly before a step increase would have.

The ceiling

By law no General Schedule rate may exceed Level IV of the Executive Schedule, which is $197,200 in 2026. Where the formula would produce more, the payable rate is cut back to that figure. In the highest-paying localities this happens well before the top of the schedule, so several consecutive step increases can arrive with no change in pay at all.

What this site does not cover

Roughly a third of federal employees are not on the General Schedule. Wage Grade trades, Senior Executive Service, and agency-specific systems such as FAA's FV bands, TSA, VA Title 38 medical positions, and various demonstration projects all use different tables. Special rate schedules can also override the General Schedule for particular occupations and locations — where one applies, the employee receives the higher of the special rate and the locality rate, never the two added together.

What happens every January

The pay adjustment for the coming year is normally set in late December by executive order, after which OPM publishes the new tables — one nationwide base table and one for each locality pay area. The adjustment has two parts that are frequently confused: an across-the-board increase applied to the base schedule, and a separate locality component that differs by area. A headline figure of, say, two percent is the average of the two, and almost nobody receives exactly the average.

The President may also submit an alternative pay plan, which sets the adjustment aside and substitutes a different figure — including zero. This has happened repeatedly, and it is the mechanism by which locality percentages have been frozen while the base schedule still moved. When that happens the locality percentages carry over unchanged from the previous year, so an area’s relative position stays put even as the dollar figures rise.

New locality pay areas are added occasionally, and the effect on the people in them is large: a duty station moving out of Rest of U.S. into a named metropolitan area gains the difference between the two percentages overnight. The Federal Salary Council reviews candidate areas and recommends additions, but the process takes years and the recommendation is not binding.

Reading a pay table correctly

Two mistakes account for most of the confusion we see. The first is adding the locality percentage to a figure that already includes it — the tables OPM publishes per locality are final rates, not base rates awaiting an adjustment. The second is assuming the ten steps are evenly spaced. They are not, particularly at the bottom of the schedule, and extrapolating from the gap between step 1 and step 2 produces numbers that are wrong by hundreds of dollars.

There is also a rounding question that changes results at the top of the schedule. The locality percentage is applied to the base rate and the result rounded, and only then is the statutory ceiling applied. Doing it in the other order gives different figures for capped cells, which is one reason published numbers occasionally disagree between sites. Every figure on this site was recomputed in the correct order and checked against the official table cell by cell.