The $197K Ceiling: When Your GS Pay Gets Capped in 2026
The 2026 GS pay cap is $197,200. Learn which grades hit the ceiling, how it affects your FERS pension, and what happens to money you lose at the cap.
The $197K Ceiling: When Your GS Pay Gets Capped in 2026
Last Updated: January 29, 2026 Reading Time: 10 min
If you're a GS-15 in San Francisco, your calculated salary should be $216,847. But you'll never see it. The GS pay cap cuts your pay by nearly $20,000 a year.
This is pay compression, and it's getting worse every year. In 2020, 25 locality areas were affected. By 2026, that number has grown to 37 areas, which is 64% of all localities.
Here's everything you need to know about the 2026 pay cap, who it affects, and what it means for your retirement.
Key Takeaways
- The 2026 GS pay cap is $197,200 (Executive Schedule Level IV)
- GS-15 employees hit the cap in 37 of 53 locality areas (64%)
- In San Francisco, even GS-14 Steps 9-10 hit the cap
- Your FERS pension uses your capped salary, not the theoretical uncapped amount
- Basic pay over the cap is lost, but premium pay over the aggregate cap is deferred
- SES employees can earn up to $225,700, which is $28,500 more than GS
What Is the GS Pay Cap?
The GS pay cap is the maximum salary a General Schedule employee can earn. For 2026, that ceiling is $197,200, which equals Executive Schedule Level IV.
No matter how high your locality rate, your total salary cannot exceed this amount.
| Year | Pay Cap | Change |
|---|---|---|
| 2026 | $197,200 | +1.02% |
| 2025 | $195,200 | +1.72% |
| 2024 | $191,900 | +4.58% |
| 2023 | $183,500 | +4.08% |
The cap increases each year, but locality pay rates in high-cost areas have grown faster. This creates "pay compression," where more employees hit the ceiling every year.
Which Grades and Steps Hit the Cap?
The pay cap primarily affects GS-15 employees, but in San Francisco, even GS-14 employees can hit it.
San Francisco (45.90% Locality) - Most Affected
| Grade | Steps at Cap | Annual Loss at Step 10 |
|---|---|---|
| GS-15 | Steps 4-10 | $19,647 |
| GS-14 | Steps 9-10 | Up to $5,000 |
Washington DC (33.94% Locality)
| Grade | Steps at Cap | Notes |
|---|---|---|
| GS-15 | Steps 7-10 | Cap starts at Step 7 |
| GS-14 | None | Below cap |
New York (37.95% Locality)
| Grade | Steps at Cap | Notes |
|---|---|---|
| GS-15 | Steps 5-10 | Cap starts at Step 5 |
| GS-14 | None | Below cap |
Los Angeles (36.47% Locality)
| Grade | Steps at Cap | Notes |
|---|---|---|
| GS-15 | Steps 6-10 | Cap starts at Step 6 |
| GS-14 | None | Below cap |
The pattern: Higher locality rates mean you hit the cap at lower steps. In San Francisco, a GS-15 hits the ceiling at Step 4. In DC, it doesn't happen until Step 7.
Use our GS Pay Calculator to see if your specific grade, step, and locality combination hits the pay cap.
How the Pay Cap Affects Your Retirement
Here's what many federal employees don't realize: your FERS pension uses your actual capped salary, not the theoretical uncapped amount.
What This Means for Your High-3
If you're capped at $197,200, your High-3 average salary is $197,200, not the higher amount you would have earned without the cap.
Example: GS-15 Step 10 in San Francisco
| Scenario | High-3 Average | FERS Annuity (30 years, 1.1%) |
|---|---|---|
| Without Cap | $216,847 | $71,560/year |
| With Cap | $197,200 | $65,076/year |
| Annual Pension Loss | $6,484/year |
Over a 25-year retirement, that's $162,100 in lost pension benefits.
What Counts in Your High-3
Included:
- Base pay (capped)
- Locality pay (capped)
- Shift differentials (if retirement deductions taken)
- Law enforcement availability pay
Not Included:
- Overtime pay
- Bonuses and awards
- COLA adjustments
- Premium pay beyond biweekly cap
Use our High-3 Calculator to see how your average salary affects your pension.
What Happens to "Lost" Money?
There are two types of money affected by pay limits, and they're treated differently.
Basic Pay and Locality Pay: LOST
When your locality-adjusted salary exceeds $197,200:
- The difference is simply not paid
- It does not roll over or defer
- It does not get paid later
- It is permanently lost
A GS-15 Step 10 in San Francisco loses $19,647 every year with no recovery.
Premium Pay and Awards: DEFERRED
When overtime, awards, or bonuses would push you over the aggregate cap ($246,400 for most GS employees):
- Excess amounts are deferred
- Paid as lump-sum at the start of the following calendar year
- If you separate, paid after a 30-day break in service
- This money is not lost, just delayed
How Deferral Works
- Your agency estimates if you'll exceed the aggregate cap
- Discretionary payments (awards) are deferred first
- Nondiscretionary payments (differentials) are deferred second
- Basic pay is NEVER deferred or reduced
- Deferred amounts are paid in January of the following year
Can You Still Get Awards at the Cap?
Yes, but expect delays.
| Payment Type | Subject to Cap? | What Happens |
|---|---|---|
| Cash Awards | Yes (aggregate) | May be deferred |
| Performance Bonuses | Yes (aggregate) | May be deferred |
| Quality Step Increases | Yes | Adds to base pay, still capped |
| Retention Incentives | Yes (aggregate) | May be deferred |
| Student Loan Repayment | No | Not counted toward cap |
| Leave Buyout | No | Not counted toward cap |
If you're at the pay cap and receive a $5,000 award that would push you over the aggregate limit, the excess gets deferred to January of the following year.
Exceptions and Alternative Pay Systems
Some federal employees aren't subject to the standard GS cap.
Agencies with Independent Pay Authority
These agencies operate outside Title 5 pay limits:
- Federal Aviation Administration (FAA)
- Securities and Exchange Commission (SEC)
- Federal Reserve Board
- Transportation Security Administration (TSA)
Other Exceptions
- Medical professionals (Title 38): VA physicians have unique pay structures
- Intelligence community: CIA, NSA may have different pay rules
- Demonstration projects: Some agencies have modified pay systems
- Emergency work: Agencies can apply annual (vs. biweekly) caps for emergency response
However, even with exceptions, most still face some form of upper limit.
SES vs. GS Pay Caps
Senior Executive Service employees have different, higher caps than GS employees.
| Factor | GS | SES |
|---|---|---|
| Pay Cap | $197,200 (EX-IV) | $207,500-$225,700 |
| Aggregate Cap | $246,400 (EX-I) | $289,400 (VP salary) |
| Locality Pay | Yes | No |
2026 SES Pay Ranges
- Minimum: $152,258 (120% of GS-15 Step 1)
- Maximum (non-certified agency): $207,500 (EX-III)
- Maximum (certified agency): $225,700 (EX-II)
SES employees can earn $28,500 more than GS employees at the cap. However, SES don't receive locality pay, so the comparison isn't straightforward in lower-cost areas.
The Pay Compression Problem
Pay compression happens when the pay cap prevents higher-graded employees from earning proportionally more than lower-graded employees in the same locality.
How Bad Is It?
- 2020: 25 locality areas affected by pay compression
- 2024: 91 grade/step combinations at the cap
- 2025: 98 grade/step combinations at the cap (up 7.7%)
- 2026: 37 of 53 localities affected (64% of all areas)
The Core Problem
Locality pay rates grow faster than Executive Schedule salaries. In DC, locality pay is 33.94%. When the 1% annual raise is applied, locality-adjusted salaries increase more than the cap increases.
Result: More employees hit the ceiling every year, and those already at the cap get effectively smaller raises.
What Congress Could Do
Several legislative proposals have addressed pay compression:
- Raising EX-IV to keep pace with locality rates
- Creating a separate GS "super cap" above EX-IV
- Locality-specific caps based on cost of living
None have passed as of 2026.
Law Enforcement and the 3.8% Raise
Federal law enforcement officers receive a 3.8% raise in 2026, higher than the 1% for other GS employees.
But here's the catch: The 3.8% raise is still capped at $197,200.
OPM specifically noted that "this statutory pay cap will prevent some covered law enforcement personnel from receiving the full 3.8% increase."
A law enforcement officer already at $195,000 gets a $2,200 raise to the cap, not the $7,410 (3.8%) they would otherwise receive.
Calculate Your Pay Cap Impact
Want to see exactly where you stand? Our GS Pay Calculator shows your salary by grade, step, and locality, and whether you're hitting the 2026 pay cap.
Use it to:
- See your current salary with locality pay
- Check if your grade/step hits the $197,200 cap
- Compare pay across different localities
Frequently Asked Questions
What is the GS pay cap for 2026?
The 2026 GS pay cap is $197,200, which equals Executive Schedule Level IV. This is a 1.02% increase from the 2025 cap of $195,200. Any GS employee whose locality-adjusted salary would exceed this amount has their pay capped at $197,200.
Which GS grades and steps are affected by the pay cap?
The pay cap primarily affects GS-15 employees in about 37 of 53 locality areas. In San Francisco, even GS-14 Steps 9-10 hit the cap. In DC, GS-15 employees hit the cap at Step 7 or above. The exact step depends on your locality rate.
Does the pay cap affect my FERS retirement pension?
Yes. Your High-3 average salary uses your actual capped salary, not the theoretical uncapped amount. If you're capped at $197,200 for your final 3 years, your pension calculation uses $197,200, which can reduce your pension by thousands per year.
What happens to the money I lose due to the pay cap?
For basic pay and locality pay, the money is simply never paid. It's lost. For premium pay, awards, and bonuses that would exceed the aggregate cap, the excess is deferred and paid as a lump sum the following January. Basic pay is never deferred.
Can I still receive awards and bonuses if I'm at the pay cap?
Yes, but they may be deferred. If your combined basic pay plus awards would exceed the annual aggregate cap of $246,400 for most GS employees, the excess is deferred until the following calendar year.
How is the SES pay cap different from the GS pay cap?
SES employees can earn up to $225,700 at agencies with certified performance systems, or $207,500 at other agencies. This is $10,300 to $28,500 more than the GS cap of $197,200. SES also has a higher aggregate cap.
Related Resources
- GS Pay Calculator: See if your salary hits the cap
- GS Pay Guide 2026: Complete guide to federal pay tables
- High-3 Calculator: Calculate your retirement average salary
- FERS Retirement Calculator: Estimate your pension with capped salary
- GS Step Increases: Understand the 18-year step timeline
Sources
Calculate Your 2026 Numbers
Calculate your exact 2026 salary with locality adjustments
Open GS Pay Calculator