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2026 Federal Workforce Outlook: RIFs, Pay, and What's Next

317,000+ federal employees left in 2025. What's coming in 2026? RIF moratorium expires Jan 30, 1% pay raise, forced ratings. Here's how to prepare.

By FedTools Team12 min read

2026 Federal Workforce Outlook: RIFs, Pay, and What's Next

Last Updated: January 21, 2026 Reading Time: 12 min

The federal workforce just experienced its largest reduction since World War II. More than 317,000 employees left government service in 2025, a net decrease of roughly 10.8%. Now, with the RIF moratorium expiring January 30, 2026, and a 1% pay raise that amounts to a real wage cut, federal employees face continued uncertainty heading into the new year.

This guide consolidates everything federal employees need to know about 2026: key dates, agency impacts, policy changes, and most importantly, what you can do right now to protect yourself.

Key Takeaways

  • 317,000+ federal employees left in 2025, the largest single-year reduction since WWII (10.8% net decrease)
  • RIF moratorium expires January 30, 2026, agencies may resume layoffs after this date
  • 2026 pay raise is just 1% with no locality increase, representing a real wage decrease
  • 50,000 positions face Schedule Policy/Career reclassification, converting to at-will employment
  • Forced distribution ratings coming October 2026, with 30% cap on top performance ratings
  • Action item: Build your exit file now, verify RIF standing, and run the numbers on any VERA/VSIP offers

What Happened to the Federal Workforce in 2025

The numbers tell a stark story. According to OPM, more than 317,000 federal employees departed government service in 2025, while only 68,000 were hired to replace them.

Metric 2025 Result
Employees departed 317,000+
New hires ~68,000
Net workforce decrease ~10.8%
Voluntary departures 92%
Deferred Resignation Program 154,000 employees

The Deferred Resignation Program (DRP) drove the majority of departures. This program offered employees the option to resign with pay through September 2025, and 154,000 took the offer.

Agencies Hit Hardest

Agency Reduction Notes
USAID 83% Essentially dismantled
Consumer Financial Protection Bureau 86% Most dramatic percentage cut
Department of Education 39% Half of remaining staff via RIF
IRS 25% Customer service impacts expected
USDA 22% Second largest raw number
Department of Treasury 28% Largest by number (mostly IRS)

The return-to-office mandate also contributed significantly to departures. Many employees cited telework loss as their primary reason for leaving. Today, 90% of federal employees work on-site full-time.

Critical Dates in 2026

Mark these on your calendar. Several of these deadlines could directly affect your career.

January 2026

Date Event What It Means
January 1 2026 pay raise effective 1% base, no locality increase
January 28 TSP Roth in-plan conversion launches New retirement planning option
January 30 RIF moratorium expires Agencies may resume layoffs
January 30 Current CR funding expires Potential shutdown risk

Later in 2026

Date Event What It Means
February FY2027 budget submission May be delayed
TBD (early 2026) Schedule Policy/Career final rule Reclassification of 50,000 positions
July 4 DOGE final report due New restructuring recommendations
October 1 Governmentwide performance cycle begins Forced distribution ratings start

The 2026 Pay Raise: A Real Wage Cut

The 2026 federal pay raise is 1% for base pay with no locality pay increase. This is the smallest raise since 2021.

Year Total Raise Notes
2024 5.2% Biden administration
2025 2.0% Trump administration
2026 1.0% Smallest since 2021

What This Means for Your Paycheck

For a GS-13 Step 5 in the DC locality area:

Year Approximate Salary Change
2024 $124,000 +5.2%
2025 $127,000 +2.0%
2026 $128,300 +1.0%

With inflation running at roughly 2.8%, this 1% raise represents a real wage decrease. Your paycheck goes up by about $1,300 per year, but your purchasing power actually declines.

Federal retirees are in slightly better shape. CSRS retirees received a 2.8% COLA, while FERS retirees received 2.0% (FERS COLAs are reduced by 1% when the CSRS COLA exceeds 3%).

Use the GS Pay Calculator to see your exact 2026 salary.

RIF Moratorium: What Happens After January 30

The continuing resolution passed in November 2025 included a provision pausing all agency layoffs through January 30, 2026. OPM guidance told agencies to "cease issuing RIF notices until January 31, 2026."

After January 30, agencies can:

  • Resume previously planned RIFs
  • Initiate new RIF actions
  • Continue using VERA/VSIP to meet reduction targets
  • Proceed with Schedule Policy/Career reclassifications

Agencies to Watch

Agency Situation Risk Level
SSA 7,000 reduction target, RIF possible if VERA/VSIP misses High
VA Up to 80,000 positions at risk High
DOD civilian 5-8% reduction ongoing Moderate
Education Continued dismantling expected High
IRS Further reductions possible Moderate

If your agency has announced reduction targets or offered VERA/VSIP, the RIF moratorium expiration is your signal to prepare. Review our RIF Survival Guide 2026 for detailed information on retention standing, bump and retreat rights, and severance calculations.

VERA/VSIP: Who's Offering Buyouts in 2026

With the RIF moratorium expiring, expect more agencies to request VERA/VSIP authority. Here's what's currently active:

Agency Status VSIP Amount
SSA Active VERA + VSIP Up to $25,000
DOD/DHA Active VERA + VSIP Up to $40,000
Interior Recently closed, may reopen Up to $25,000
Commerce Recently closed, may reopen Up to $25,000
HHS Recently closed, may reopen Up to $25,000

Key VERA/VSIP Considerations

Before taking a buyout, understand these critical factors:

  1. VERA has no penalty for FERS employees (unlike MRA+10)
  2. VSIP is fully taxable, expect $17,000-$19,000 net from $25,000
  3. No FERS COLAs until age 62, budget for inflation
  4. FERS Supplement delayed until you reach MRA
  5. TSP penalty if separating before age 55 (Rule of 55)
  6. FEHB 5-year rule required for retiree health coverage

Check if you qualify using our VERA/VSIP Guide 2026, then run your numbers with the FERS Retirement Calculator.

Schedule Policy/Career: 50,000 Positions at Risk

Schedule Policy/Career (formerly known as Schedule F) would convert approximately 50,000 career federal employees in "policy-related" positions into at-will employees.

What this means:

  • Loss of civil service protections
  • No MSPB appeal rights for adverse actions
  • Positions can be terminated without cause

Who's affected:

  • Policy advisors
  • Senior subject matter experts
  • Positions that "substantially participate in policy development"
  • At OMB, 68% of the workforce (415 employees) in initial assessment

The final rule is expected early 2026. Agencies have already submitted their position lists to OPM.

Forced Distribution Performance Ratings

OPM is implementing forced distribution ratings, citing "rampant ratings inflation."

What's Changing

For SES (FY 2026):

  • 30% cap on Level 4/5 ratings
  • Already finalized in September 2025
  • Effective for the current rating cycle

For All Federal Employees (Proposed):

  • Draft rule would remove the prohibition on forced distribution
  • Agencies could set quotas for each rating level
  • Would affect 2+ million civil servants
  • Governmentwide performance cycle begins October 1, 2026

Under this system, not everyone can get top ratings regardless of performance. Some managers will need to lower ratings to meet quotas.

Calculate Your Options

Whether you're considering VERA/VSIP, worried about RIF, or just planning ahead, run your numbers now.

Severance Pay Calculator: If RIF is possible, estimate what you'd receive. Federal severance is based on your years of service and salary.

FERS Retirement Calculator: Compare leaving now via VERA versus waiting. See how early retirement affects your annuity.

Federal Leave Optimizer: Plan your annual leave strategy before any separation. Unused leave gets paid out, but the timing matters.

8 Things Federal Employees Should Do Right Now

1. Build Your Exit File

Download these documents now. Access ends immediately if you leave abruptly:

  • SF-50 (verify Tenure Group in Block 24, Veterans' Preference in Block 23)
  • Last 3 Performance Appraisals
  • Leave & Earnings Statements (LES)
  • Benefits statements (FEHB, FEGLI, TSP)

2. Verify Your RIF Retention Standing

Your retention standing determines the order of RIF. It's based on:

  • Tenure (career vs. career-conditional)
  • Veterans' preference
  • Performance ratings
  • Length of service

Review the RIF Survival Guide 2026 for details on bump and retreat rights.

3. Run the Numbers on VERA/VSIP

If your agency offers a buyout, don't decide emotionally. Use calculators to compare:

  • Pension at VERA retirement age vs. regular retirement
  • Net VSIP after taxes
  • Health insurance continuation (5-year FEHB rule)
  • TSP implications (Rule of 55)

4. Build Cash Reserves

Plan for delays in:

  • Annual leave payouts (can take 4-6 weeks)
  • First retirement check (can take 2-3 months)
  • TSP distributions (can take 30+ days)

Aim for 3-6 months of expenses in cash.

5. Review TSP Strategy

The TSP Roth in-plan conversion launches January 28, 2026. This lets you convert Traditional TSP to Roth directly within your account. Consider:

  • Converting during low-income years
  • Reducing future RMDs
  • Building tax-free retirement income

6. Check Your FEHB Status

For retiree health coverage, you need 5 years of continuous FEHB enrollment. If you're short, you may lose coverage eligibility.

Also note: FEHB premiums increased double-digits for 2026. Factor this into retirement planning.

7. Document Your Accomplishments

With forced distribution ratings coming, documentation matters more than ever. Keep records of:

  • Projects completed
  • Metrics achieved
  • Recognition received
  • Skills developed

8. Consider Your Options

The federal workforce is changing. Whether you stay or go:

  • Update your resume and LinkedIn profile. If your headshot is outdated, FedShot generates professional headshots in 60 seconds.
  • Maintain professional networks
  • Consider skills that transfer to private sector
  • Each promotion raises your High-3 for retirement

Frequently Asked Questions

What happened to the federal workforce in 2025?

More than 317,000 federal employees left government in 2025, the largest single-year reduction since WWII. About 92% left voluntarily, primarily through the Deferred Resignation Program (154,000 employees). With only 68,000 new hires, the net workforce decrease was approximately 10.8%. The hardest-hit agencies included USAID (83% reduction), Education (39%), IRS (25%), and Treasury (28%).

What is the 2026 federal pay raise?

The 2026 federal pay raise is 1% for base pay with no locality pay increase, the smallest raise since 2021. Unlike recent years (5.2% in 2024, 4.6% in 2023), there is no additional locality adjustment. For a GS-13 Step 5 in DC, this means approximately $1,300 more per year. With inflation running higher than 1%, this represents a real wage decrease.

When does the RIF moratorium expire?

The RIF moratorium expires on January 30, 2026. The November 2025 continuing resolution included a provision pausing all agency layoffs through this date. Without a renewal, agencies could proceed with planned layoffs and potentially new ones.

What is Schedule Policy/Career and how does it affect federal employees?

Schedule Policy/Career (formerly Schedule F) is a new job classification that would convert approximately 50,000 career federal employees in "policy-related" positions into at-will employees. Once converted, these employees would lose civil service protections and MSPB appeal rights for adverse actions. The final rule is expected early 2026.

Which federal agencies are offering VERA/VSIP in 2026?

As of January 2026, agencies with known VERA/VSIP activity include SSA (7,000 reduction target), DOD/DHA (offering up to $40,000 VSIP), and potentially reopening offers at Interior, Commerce, and HHS. With the RIF moratorium expiring January 30, expect more agencies to request VERA/VSIP authority. Check with your agency HR for current offerings.

What should federal employees do to prepare for 2026?

Build an exit file with SF-50, performance appraisals, and LES documents. Verify RIF retention standing by checking tenure and veterans' preference codes. Build 3-6 months cash reserves. Run the numbers on any VERA/VSIP offers using calculators. Review FEHB enrollment for the 5-year rule. Document accomplishments for performance reviews.

How will forced distribution ratings affect federal employees?

OPM is implementing forced distribution performance ratings, starting with a 30% cap on top ratings for SES in FY 2026. A draft rule would extend this to all 2+ million federal employees. Under this system, agencies would set quotas for how many employees can receive each rating level. The governmentwide performance cycle begins October 1, 2026.

Sources

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