It’s 2026 and with the new year comes several changes affecting federal employee pay, retirement, health care, and other workplace benefits.

The 2026 pay raise for general schedule (GS) employees will take effect during the first full pay period of 2026 (being January 11th-24st for the majority of employees). In December, President Trump signed an executive order implementing the smallest raise since 2021, a one percent increase for most civilian employees. There has been no increase in locality pay.

Some federal law enforcement officers and members of the U.S. military are in line for a 3.8 percent pay bump.

Federal Employee Health Benefits (FEHB) and Federal Employees Dental and Vision Insurance Program (FEDVIP) plan elections and premiums will also take effect the first pay period of the year.

Tax Changes

There are also adjustments in certain tax savings programs.

For instance, the maximum amount that can be carried forward from 2026 to 2027 in Health Care Flexible Spending Accounts is $680, raising from $660 the year prior.

For dependent care accounts, a 10-week grace period for using unspent money will now carry from one year to the next.

The maximum tax-free amount allowed under the public transit subsidy program is rising from $325 to $340, as is the tax-free benefit for parking at a transit lot.

And the Internal Revenue Service (IRS) says the mileage rate for certain tax deductibility purposes will rise from 70 cents per mile to 72.5 cents for 2026. The General Services Administration (GSA) typically mirrors that figure when setting the mileage reimbursement rate for federal employees using personal vehicles for official purposes.

Retirement Changes

For retirement, the annual contribution limit for the federal government’s Thrift Savings Plan is increased to $24,500, up from $23,500 for 2025. The limit to annual contributions to an IRA is increased to $7,500 from $7,000.

Meanwhile, the interest rate charged to federal employees who need to pay to get retirement credit for certain past service will drop in 2026, falling to 4.25 percent from 4.375 percent. This rate applies when employees make payments to cover time when retirement contributions weren’t taken out of their pay, when contributions were refunded after leaving federal service, or when buying back military service time for retirement credit.

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