Locality Pay Strategy: Which Areas Pay Federal Employees Most
2026 federal locality pay rates for all 58 areas. San Francisco pays $24K more than Rest of US. See how locality affects your salary and FERS pension.
Locality Pay Strategy: Which Areas Pay Federal Employees Most
Last Updated: January 29, 2026 Reading Time: 11 min
A GS-12 Step 5 in San Francisco earns $118,270. The same grade and step in rural Nebraska earns $94,612. That's a $23,658 difference for doing the exact same job.
This is locality pay, and understanding how it works can mean tens of thousands of dollars over your career, both in paychecks and in retirement.
Key Takeaways
- There are 58 locality pay areas in 2026 (57 specific + Rest of U.S.)
- San Francisco has the highest rate at 46.34%, followed by New York (37.95%) and Los Angeles (36.47%)
- Rest of U.S. is 17.06%, the lowest rate
- Locality is based on your official duty station, not home address
- Locality pay IS included in your High-3 retirement calculation
- 2026 locality rates are frozen at 2025 levels (0% increase)
What Is Locality Pay?
Locality pay is an extra percentage added to your base pay based on where you work. It was created to make federal salaries competitive with private sector wages in expensive areas.
The formula is simple:
Total Pay = Base Pay × (1 + Locality Percentage)
Example: A GS-12 Step 5 earns $80,821 in base pay. In Washington DC with 33.94% locality:
$80,821 × 1.3394 = $108,253
That same employee in San Francisco (46.34%):
$80,821 × 1.4634 = $118,270
2026 Locality Pay Rates by Area
Top 10 Highest Paying Localities
These areas offer the biggest paychecks for federal employees:
| Rank | Locality Area | Rate | GS-12/5 Salary |
|---|---|---|---|
| 1 | San Jose-San Francisco-Oakland, CA | 46.34% | $118,270 |
| 2 | New York-Newark, NY-NJ-CT-PA | 37.95% | $111,501 |
| 3 | Los Angeles-Long Beach, CA | 36.47% | $109,305 |
| 4 | Houston-The Woodlands, TX | 35.00% | $109,108 |
| 5 | Washington-Baltimore-Arlington, DC | 33.94% | $108,253 |
| 6 | San Diego-Chula Vista-Carlsbad, CA | 33.72% | $108,074 |
| 7 | Boston-Worcester-Providence, MA | 32.58% | $107,153 |
| 8 | Alaska (Statewide) | 32.36% | $106,975 |
| 9 | Hartford-East Hartford, CT-MA | 32.08% | $106,749 |
| 10 | Seattle-Tacoma, WA | 31.57% | $106,337 |
The gap is significant. A GS-12 Step 5 in San Francisco earns $23,658 more per year than the same position at the Rest of U.S. rate.
Complete List of All 58 Locality Pay Areas
Here's the complete list, from highest to lowest:
| Locality Area | Rate |
|---|---|
| San Jose-San Francisco-Oakland, CA | 46.34% |
| New York-Newark, NY-NJ-CT-PA | 37.95% |
| Los Angeles-Long Beach, CA | 36.47% |
| Houston-The Woodlands, TX | 35.00% |
| Washington-Baltimore-Arlington, DC | 33.94% |
| San Diego-Chula Vista-Carlsbad, CA | 33.72% |
| Boston-Worcester-Providence, MA | 32.58% |
| Alaska (Statewide) | 32.36% |
| Hartford-East Hartford, CT-MA | 32.08% |
| Seattle-Tacoma, WA | 31.57% |
| Chicago-Naperville, IL-IN-WI | 30.86% |
| Denver-Aurora, CO | 30.52% |
| Sacramento-Roseville, CA-NV | 29.76% |
| Detroit-Warren-Ann Arbor, MI | 29.12% |
| Philadelphia-Reading-Camden, PA | 28.99% |
| Minneapolis-St. Paul, MN-WI | 27.62% |
| Dallas-Fort Worth, TX-OK | 27.26% |
| Portland-Vancouver-Salem, OR-WA | 26.13% |
| Miami-Port St. Lucie-Fort Lauderdale, FL | 24.67% |
| Atlanta-Athens-Clarke County, GA | 23.79% |
| Milwaukee-Racine-Waukesha, WI | 22.42% |
| Phoenix-Mesa, AZ | 22.45% |
| Buffalo-Cheektowaga-Olean, NY | 22.41% |
| Richmond, VA | 22.28% |
| Raleigh-Durham-Cary, NC | 22.24% |
| Cleveland-Akron-Canton, OH | 22.23% |
| Hawaii (Statewide) | 22.21% |
| Columbus-Marion-Zanesville, OH | 22.15% |
| Cincinnati-Wilmington-Maysville, OH-KY-IN | 21.93% |
| Huntsville-Decatur, AL-TN | 21.91% |
| Laredo, TX | 21.59% |
| Dayton-Springfield-Kettering, OH | 21.42% |
| Pittsburgh-New Castle-Weirton, PA | 21.03% |
| Albany-Schenectady, NY-MA | 20.77% |
| Austin-Round Rock-Georgetown, TX | 20.35% |
| Colorado Springs, CO | 20.15% |
| St. Louis-St. Charles-Farmington, MO-IL | 20.03% |
| Charlotte-Concord, NC-SC | 19.67% |
| Las Vegas-Henderson, NV-AZ | 19.57% |
| Burlington-South Burlington-Barre, VT | 19.45% |
| Harrisburg-Lebanon, PA | 19.43% |
| Tucson-Nogales, AZ | 19.28% |
| Kansas City-Overland Park, MO-KS | 18.97% |
| Davenport-Moline, IA-IL | 18.93% |
| Virginia Beach-Norfolk, VA-NC | 18.80% |
| San Antonio-New Braunfels-Pearsall, TX | 18.78% |
| Albuquerque-Santa Fe-Las Vegas, NM | 18.33% |
| Birmingham-Hoover-Talladega, AL | 18.24% |
| Omaha-Council Bluffs-Fremont, NE-IA | 18.23% |
| Indianapolis-Carmel-Muncie, IN | 18.15% |
| Des Moines-Ames-West Des Moines, IA | 18.01% |
| Palm Bay-Melbourne-Titusville, FL | 17.93% |
| Rochester-Batavia-Seneca Falls, NY | 17.88% |
| Spokane-Spokane Valley-Coeur d'Alene, WA | 17.67% |
| Fresno-Madera-Hanford, CA | 17.65% |
| Corpus Christi-Kingsville-Alice, TX | 17.63% |
| Reno-Fernley, NV | 17.52% |
| Rest of U.S. | 17.06% |
If your duty station isn't in one of the 57 specific areas, you receive the Rest of U.S. rate of 17.06%.
How Locality Is Determined
This is where many federal employees get confused. Your locality pay isn't based on where you live. It's based on your official duty station.
The Official Worksite Rule
| Work Arrangement | Report to Office | Locality Based On |
|---|---|---|
| Full-time in-office | Daily | Agency office |
| Hybrid (2+ days) | Twice per pay period minimum | Agency office |
| Minimal telework | Less than twice per pay period | Home address |
| Fully remote | Never | Home address |
The "Twice Per Pay Period" Rule
If you report to the office at least twice per biweekly pay period, your locality pay is based on the office location, even if you telework the other days.
Example: You telework from home in Richmond (22.28%) but your office is in Washington DC (33.94%). If you go to the office twice per pay period, you get DC locality pay.
If you only go once per pay period or never, your locality would change to Richmond.
What Happens If You Move?
For remote workers, moving affects your pay:
- Move to higher-cost area: Your locality pay increases
- Move to lower-cost area: Your locality pay decreases
Warning: Moving from DC (33.94%) to a Rest of U.S. area (17.06%) while working remotely could cost you over $14,000 annually.
Telework and Return-to-Office Impact
The 2025 return-to-office mandate changed the landscape significantly.
Current State (January 2026)
- Approximately 90% of federal employees now work on-site full-time
- Remote work arrangements are being terminated with limited exceptions
- Telework is now a "management tool, not an entitlement"
Who Can Still Work Remotely?
- Employees with disabilities (reasonable accommodation)
- Those with qualifying medical conditions
- Military and Foreign Service spouses overseas
- Other "compelling reasons" at agency discretion
If you're currently remote and facing return-to-office, your locality pay may change when your official duty station is updated.
Locality Pay and Your Retirement
Here's something critical that many employees overlook: locality pay is included in your High-3 calculation for FERS retirement.
What's Included in High-3
| Pay Type | Included? |
|---|---|
| Base pay | Yes |
| Locality pay | Yes |
| Overtime | No |
| Bonuses | No |
| Awards | No |
Strategic Implications
If you've worked in multiple localities during your career, your High-3 might not be your final three years.
Example:
- Years 1-25: San Francisco (46.34% locality)
- Years 26-30: Rest of U.S. (17.06% locality)
Your High-3 would likely use your San Francisco years, not your final three years, because your San Francisco salary was higher.
Use our High-3 Calculator to see which years give you the highest average.
Where You Retire Doesn't Matter
Your retirement annuity is locked in based on your High-3 while employed. Moving to a lower-cost area after retirement does NOT reduce your pension.
This is actually a strategy some employees use: work in a high-locality area to maximize their High-3, then retire to a lower-cost area where their pension goes further.
The Pay Gap: Why Locality Pay Exists
Locality pay was created by the Federal Employees Pay Comparability Act (FEPCA) in 1990 with a specific goal: bring federal salaries within 5% of comparable private sector wages.
Current Reality
| Metric | Value |
|---|---|
| Federal-private pay gap | 24.72% |
| FEPCA target gap | 5% |
| Years FEPCA target has been met | 0 (never) |
Despite 30+ years of locality pay, the federal-private wage gap has never closed to the 5% target. Presidents from both parties have consistently overridden the FEPCA formula, setting locality increases lower than required.
2026 Example
The FEPCA formula called for an 18.88% locality increase in 2026. The actual increase was 0%, with locality rates frozen at 2025 levels.
The Pay Cap Problem in High-Locality Areas
In expensive areas, high-grade employees run into the pay cap of $197,200 (Executive Schedule Level IV).
Who Hits the Cap?
| Locality | GS-15 Cap Starts At |
|---|---|
| San Francisco | Step 4 |
| New York | Step 5 |
| Los Angeles | Step 6 |
| DC | Step 7 |
| Rest of U.S. | Not until Step 10 |
The irony: In San Francisco, a GS-15 at Step 4 earns the same as a GS-15 at Step 10. Both are capped at $197,200.
This is called pay compression, and it's getting worse every year. Learn more in our GS Pay Cap guide.
Changing Your Locality and Special Cases
Can You Change Your Locality?
Not directly. Your locality is tied to your position's duty station.
Options to change locality:
- Transfer to a different position in another location via Internal Placement or competitive application
- Request remote work with a new official worksite (if your agency allows it)
- Apply for a hardship transfer (limited circumstances)
What you cannot do:
- Request a locality change without changing positions
- Choose your locality independently of your duty station
- Get a different locality than coworkers at the same office
Overseas Federal Employees
GS employees in foreign countries are not eligible for locality pay. Instead, they may receive:
| Allowance | Purpose |
|---|---|
| Post Allowance | Compensates for higher cost of living abroad |
| Post Hardship Differential | Compensates for difficult conditions |
| Danger Pay | For dangerous environments |
Exception: Military and Foreign Service spouses teleworking overseas now receive locality pay equivalent (as of 2023 NDAA).
Alaska (32.36%) and Hawaii (22.21%) are domestic and have their own locality rates.
Calculate Your Locality Pay
Want to see your exact salary for any locality area? Our GS Pay Calculator lets you calculate pay for all 58 localities, any grade, and any step.
Use it to:
- See your current salary with locality
- Compare salaries across different locations
- Plan for moves or transfers
Frequently Asked Questions
How many locality pay areas are there in 2026?
There are 58 locality pay areas in 2026: 57 specific metropolitan or regional areas plus the Rest of U.S. catch-all rate. This is unchanged from 2025.
Which locality has the highest pay rate?
San Jose-San Francisco-Oakland, CA has the highest locality rate at 46.34%. A GS-12 Step 5 in San Francisco earns about $24,000 more annually than the same position in a Rest of U.S. location.
Is locality pay based on where I live or where I work?
Locality pay is based on your official duty station (where you work), not your home address. For teleworkers who report to the office at least twice per biweekly pay period, locality is based on the office location. For remote workers, it's based on the home address.
Does locality pay affect my FERS retirement?
Yes. Locality pay is included in your high-3 average salary calculation, which determines your FERS annuity. Higher locality pay during your career means a higher retirement benefit.
What is the Rest of U.S. locality rate for 2026?
The Rest of U.S. rate for 2026 is 17.06%, unchanged from 2025. This applies to federal employees in locations not covered by one of the 57 specific locality areas.
Why didn't locality pay increase in 2026?
Executive Order 14368 allocated the entire 1% federal pay raise to base pay, with 0% for locality adjustments. This means locality percentages are frozen at 2025 levels.
Related Resources
- GS Pay Calculator: Calculate your exact salary for any locality
- GS Pay Guide 2026: Complete guide to federal pay tables
- GS Pay Cap Explained: The $197K ceiling in high-locality areas
- GS Step Increases: The 18-year timeline to Step 10
- High-3 Calculator: Find your highest salary years
- FERS Retirement Calculator: See how locality affects your pension
Sources
Calculate Your 2026 Numbers
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