Last Updated: September 23, 2026 Update, September 23, 2026: OPM delegated its own review and approval of $10,001 to $25,000 awards to agency heads on September 21, 2026. The agency head certification and Presidential approval above $25,000 are unchanged.

OPM performance awards in 2026 are not what they were in 2024. OPM's September 21, 2026 FY2026 memo sets recommended parameters: Level 3 awards capped at 3% of salary, Level 4 and Level 5 awards at least 4% and 7% when paid. The July 7, 2026 final rule (91 FR 41521) lets OPM limit how many employees can hold Level 4 or Level 5 ratings at all. Your award amount comes down to your rating, your grade, and which agency you work for. Here is the math, the tax bite, and the per-grade dollar table no competitor has published.

The Four Types of Federal Performance Awards

Federal awards are governed by 5 U.S.C. Chapter 45 and 5 CFR Part 451. There are four types:

Cash Awards (Performance-Based): the most common. Up to 10% of basic pay at agency discretion, up to 20% for exceptional performance. Awards from $10,001 to $25,000 required OPM approval under 5 U.S.C. § 4502(b) until September 21, 2026, when OPM delegated that review to agency heads; the agency head's "highly exceptional and unusually outstanding" certification is still required. Presidential approval is still required above $25,000.

The September 21, 2026 delegation reaches awards under 5 U.S.C. §§ 4503, 4505 and 4505a. It does not reach Presidential awards (§ 4504), Presidential Rank Awards (§§ 4507 and 4507a), or SES career performance awards (§ 5384), so nothing in it changes the SES row in the agency table below.

Quality Step Increase (QSI): a permanent one-step increase in your GS step. Requires the highest available rating. Cannot repeat within 52 weeks. Not available at Step 10. For an employee several steps from step 10 with years to go, it is often the most valuable award; compare it against the cash figure.

Time-Off Awards: excused absence without charge to leave. OPM sets no governmentwide hour limits; agencies set single-award and annual caps (40 and 80 hours are common). OPM sets no governmentwide deadline to use it; your agency's policy sets the use-by period, and a new agency need not honor an award earned elsewhere. No tax event.

Special Act Awards: recognize a specific accomplishment outside the rating cycle. Same dollar ceilings as performance cash awards. Does NOT require a current rating of record.

OPM Performance Awards 2026: What the August 2025 Memo Changed

The OPM Awards Guidance Memo dated August 11, 2025 changed how agencies distribute bonus pools. The rules:

  1. At least 60% of all non-SES bonus funds should go to employees rated Level 4 or Level 5 (OPM's guidance language, carried into the FY2026 memo).
  2. Level 3 ("Fully Successful") employees could receive no more than 1% of salary in cash awards under that memo. Superseded for FY2026: the September 21, 2026 memo raises the Level 3 ceiling to 3% of basic pay and adds floors of 4% for Level 4 and 7% for Level 5 when an award is paid.
  3. No performance-based awards below Level 3. Employees rated 1 or 2 cannot receive rating-based performance awards; contribution-based awards run under separate authority and agency policy.

Agencies had to submit plans aligning with the new guidance by September 8, 2025. FY2025 award distribution reports were due to OPM by February 27, 2026.

The direction is the same under both memos. Before August 2025, a Level 3 employee at GS-13 Step 5 could receive up to $10,305 in a cash award (10% of base pay). The August memo capped that employee at $1,030; the September 21, 2026 memo sets the FY2026 ceiling at $3,091 (3% of national base pay; on DC locality pay the same 3% is $4,141, because percentage awards run on locality-adjusted basic pay under 5 CFR 451.104(g)) and says agencies may pay Level 3 nothing. That is still a 70% cut from the old ceiling for the largest rating cohort in the federal government.

For context on why this matters now, see our OPM Forced Distribution Rule guide, which explains the rule (proposed as FR 2026-03619, finalized July 7, 2026) that compresses the Level 4/5 population eligible for the high-tier bonus pool.

The 2026 System: Three OPM Actions Working Together

Three OPM actions in the past year have stacked on top of each other:

  • Aug 11, 2025 memo, superseded by the Sept 21, 2026 memo: concentrates dollars on Level 4/5 (Level 3 capped at 1%, now 3%; Level 4 and 5 floors of 4% and 7%).
  • July 7, 2026 final rule (91 FR 41521, from proposed FR 2026-03619): authorizes OPM to set a standardized rating distribution; the Sept 21 memo sets the FY2026 cap at 40% combined for Level 4 and Level 5 across career SES, SP and GS populations (with exclusions such as OIGs, wage grade and small populations).
  • April 28, 2026 Kupor memo: exempts Schedule C and G political appointees from Chapter 43 appraisal entirely.

The net effect for career GS employees: no more than 40% of a covered population may hold a Level 4 or 5 rating for FY2026 (waivers can lift a cap by at most 10 points, never above 50%), ratings must still reflect performance, and existing bargaining-agreement limits apply. Employees rated Level 3 as a result compete for the Level 3 pool, capped at 3% of pay, instead of the 60% share reserved for the top two levels. Political appointees, by contrast, are now exempt from this whole system.

See OPM April 28 Memo: Why Schedule C and G Skip Performance Reviews Now for the political-appointee exemption detail.

Original FedTools Data: Award Value by GS Grade (2026)

No competitor has published a side-by-side award value table at 2026 base pay. Here is the math:

GS Grade 2026 Base (Step 5) Level 3 (3% cap) Level 4 (4% floor) Level 5 (7% floor) QSI Annual Value (Step 5→6)
GS-9 $59,759 $1,793 $2,390 $4,183 $1,758
GS-11 $72,303 $2,169 $2,892 $5,061 $2,127
GS-12 $86,659 $2,600 $3,466 $6,066 $2,549
GS-13 $103,049 $3,091 $4,122 $7,213 $3,031
GS-14 $121,774 $3,653 $4,871 $8,524 $3,582
GS-15 $143,236 $4,297 $5,729 $10,027 $4,213

Methodology: 2026 OPM base pay at Step 5 (national base, no locality). Level 3 shows the FY2026 ceiling (3%); Level 4 and Level 5 show the FY2026 floors (4% and 7%) in OPM's recommended award parameters, which the September 21, 2026 memo says agencies "should adhere to", subject to appropriations and existing bargaining agreements. Awards remain capped at 10% (20% with agency-head certification). QSI annual value is the Step 5 to Step 6 difference, an immediate raise whose lifetime value depends on the two step schedules. Percent-of-pay awards are computed on your rate of basic pay including locality or special-rate supplements (5 CFR 451.104(g)), so these national-base cells are a floor-level illustration; your own ceiling and floors are higher by your locality percentage.

Why the QSI table is the most important column: A QSI adds $3,031 a year at GS-13 Step 5 from the day it is granted. The immediate value is $3,031 a year at these base rates; the lifetime value depends on comparing the with-QSI and without-QSI step schedules, because ordinary within-grade increases and the step 10 ceiling narrow the gap over time, while each across-the-board raise applies on the higher base. A Level 5 cash award of $7,213 in the same year is a one-time payment. For many mid-career employees the QSI comes out ahead, but not invariably: run the with-QSI and without-QSI step schedules against the cash figure.

The other reason QSIs win: cash awards do not count as basic pay, so they do NOT raise your High-3 for FERS pension purposes. QSIs do.

The After-Tax Reality: 29.65% Federal Bite

Federal cash awards are supplemental wages. The federal withholding in 2026 has three components:

Tax 2026 Rate Notes
Federal income (supplemental flat rate) 22% IRS Publication 15
Social Security 6.2% Up to $184,500 wage base
Medicare 1.45% No wage base limit
Combined federal withholding ~29.65% Before state taxes

A Level 5 cash award of $7,213 at GS-13 Step 5 nets approximately $5,075 after federal withholding alone. In a high-tax state like California or Maryland, take-home may be closer to $4,600. The actual tax owed at year-end may differ from withholding, but the cash-flow hit at award time is real.

Time-off awards have zero tax event. No income tax, no FICA. The catch: OPM sets no governmentwide deadline, but your agency's policy sets a use-by period (one year is common), there is no cash-out, and a new agency is not required to honor an award you earned at the old one.

QSIs are not taxed as a lump sum. The step increase becomes regular salary going forward, taxed at your marginal rate as earned. Both are taxable compensation; the difference is withholding method and timing, not a lower tax bill.

Agency Variation in 2026

OPM sets the rules, but agencies decide how much to spend and who gets it. The spread is wide:

Agency 2026 Awards Status Detail
Department of Defense Expanded Hegseth Dec 15 memo: top 15% of civilians get 15-25% of basic pay, up to $25,000. Paid by Jan 30, 2026. OPM's Sept 21, 2026 delegation gave every agency the same $25,000 approval authority; DoD's § 4502(f) certification waiver survives
Social Security Administration Expanded (diluted) Commissioner Bisignano directed earlier awards; eligibility expanded to 3.5/3.7 ratings, but same pool = lower per-person amounts
HHS Contracted QSI recipients capped at 3% of eligible pool (FNN April 2026)
Most civilian agencies OPM-constrained Bound by the Sept 21, 2026 FY2026 memo: 60% of pools to Level 4/5; Level 3 capped at 3% (award optional); Level 4 at least 4%, Level 5 at least 7%
SES (all agencies) Separate system Performance awards of 5% to 20% of basic pay under 5 CFR 534.405, decided by the agency head after Performance Review Board consideration; not covered by the $10,000 to $25,000 delegation; aggregate pool limits apply
USPS Separate framework Postal employees operate under a distinct pay and reward system (not 5 USC Chapter 45)

DoD's carve-out is 5 U.S.C. § 4502(f), which lets the Secretary of Defense grant a $10,001-$25,000 award "without regard to the requirements for certification and approval" that bind other agencies. OPM lists IRS as holding the same $25,000 authority. As of September 21, 2026 most of that gap closed: OPM delegated the review-and-approval half government-wide, so approval friction is no longer a reason to weigh a transfer. What still differs is the certification DoD can skip, and how much each agency chooses to spend.

Eligibility: Who Can Receive Awards in 2026

Employee Category Cash Award QSI Time-Off Special Act
Level 3 (Fully Successful) Yes (3% cap, optional) No (L5 only) Yes Yes
Level 4 (Exceeds) Yes (pool priority) No at most agencies Yes Yes
Level 5 (Outstanding) Yes (up to 10-20%) Yes (if no QSI in 52 weeks) Yes Yes
Level 1 or 2 (below FS) No (performance awards barred) No Agency policy (contribution-based awards are a separate authority) Agency policy (contribution-based awards are a separate authority)
SES employee Yes (up to 20%) N/A (no steps) Yes Yes
Schedule Policy/Career Yes Yes Yes Yes
Schedule C / Schedule G No entitlement No No entitlement No entitlement
FWS (wage grade) Yes No (the QSI authority covers GS employees only) Yes Yes
Part-time permanent Yes (prorated) Yes Yes (prorated caps) Yes

Award Denial and Appeal Rights: Mostly Bad News

The honest answer on appeals: very limited.

MSPB jurisdiction does NOT cover standalone award denials. You cannot file an MSPB appeal because your bonus was smaller than expected or denied. MSPB covers removals, suspensions over 14 days, reductions in grade or pay, and within-grade increase denials. Awards are explicitly discretionary.

Union grievance is possible where a CBA is in effect. But many federal CBAs were terminated under Executive Order 14251 (signed March 27, 2025), eliminating that path for broad categories of employees, including most DoD civilians and HHS employees.

Prohibited Personnel Practices (PPP) is the strongest available path. If an award was denied in retaliation for protected whistleblower activity, or based on race, sex, religion, or other protected category, the employee may have remedy under 5 U.S.C. § 2302 (MSPB) or Title VII (EEOC).

Internal agency grievance is the catch-all. Most agencies maintain an administrative grievance procedure independent of union arbitration, with no external enforcement.

Bottom line: "my bonus was too small" has no MSPB remedy. "My bonus was denied because I reported fraud" might.

What To Do This Performance Cycle

Before your FY2026 rating is final:

  1. Document everything. Forced distribution means your supervisor will be choosing among employees for top ratings. Make their job easier with a written record of contributions.
  2. Ask about your agency's award pool plan. It was due to OPM Sept 8, 2025. HR should know the local Level 4/5 percentages and the QSI cap for your agency.
  3. If you are Level 5 eligible and have not had a QSI in 52 weeks, ask for the QSI instead of (or in addition to) a cash award. Compare the cash award with the cumulative difference between your with-QSI and without-QSI pay schedules before choosing; for many mid-career employees the QSI wins, not for all.

If you receive an award:

  1. Check for the rating-trigger error. If you were rated Level 3 but received a cash award above 3% of basic pay for FY2026 (1% under the August 2025 memo for FY2025), the agency may have departed from OPM's guidance. Document the discrepancy.
  2. Schedule time-off awards immediately. Your agency's policy sets when they expire. Lost time off is lost cash.
  3. Adjust withholding if needed. The 22% flat supplemental withholding plus FICA is withholding, not your final tax; a large award can leave you over- or under-withheld at your marginal rate.

If you are denied:

  1. Get the denial in writing if possible. "We didn't have budget" is a different problem than "your rating was Level 3."
  2. Consider PPP grounds only if you have actual evidence of retaliation or discrimination. Pure award disputes do not survive at MSPB.

Calculate Your Performance Award

Your exact grade, step, and locality determine the base the percentages apply to. Run your numbers:

  • GS Pay Calculator: Find your exact 2026 base pay, then apply the percentages from the table above.
  • FERS Retirement Calculator: Estimate the high-3 with and without the QSI yourself, then enter each to compare the resulting annuities.
  • High-3 Calculator: Verify your High-3 baseline to quantify QSI vs cash award long-term value.
  • Federal Leave Optimizer: If you received a time-off award, plan when to use it before your agency's expiration date.

A QSI at GS-13 Step 5 raises base pay by $3,031 immediately and lifts your High-3 for as long as the step gap persists; the lifetime total depends on how soon ordinary step increases would have got you there anyway. Under the illustrated 29.65% federal withholding assumption, a $4,000 cash award leaves about $2,814 in hand before state withholding, once; the final tax depends on your return.

Frequently Asked Questions

How much of a cash bonus can a federal employee receive for a performance award?

Up to 10% of annual basic pay at the agency's discretion, or up to 20% if the agency head certifies exceptional performance. OPM's September 21, 2026 FY2026 guidance caps Level 3 ('Fully Successful') awards at 3% of basic pay, sets a 4% floor for Level 4 and a 7% floor for Level 5 when an award is paid, and lets agencies pay Level 3 nothing at all. The August 2025 memo it supersedes had capped Level 3 at 1%.

Does my agency still need OPM approval for a bonus over $10,000?

No, not up to $25,000. On September 21, 2026 OPM Director Scott Kupor issued "Delegation of OPM Review and Approval Authority for Individual Cash and Performance Awards Exceeding $10,000 and Not Exceeding $25,000," which delegates to agency heads the review-and-approval function 5 U.S.C. § 4502(b) had reserved to OPM. It is effective immediately and can be redelegated only to your agency's Chief of Staff, Chief Human Capital Officer, or a Bureau or Component head. Your agency head must still certify the accomplishment is "highly exceptional and unusually outstanding," and awards above $25,000 still require Presidential approval. The percentage ceilings on your salary are unchanged: 10%, or 20% with an exceptional-performance certification.

What is a Quality Step Increase (QSI) and how is it different from a cash award?

A QSI is a one-step increase granted ahead of the normal waiting period. Unlike a cash award (paid once), it raises your base salary now: a GS-13 Step 5 QSI adds $3,031 a year immediately. The lifetime gain is the gap between the with-QSI and without-QSI step schedules, which narrows as ordinary within-grade increases and step 10 catch up. It requires the highest available rating (typically Level 5), and you cannot receive a second QSI within 52 weeks. QSIs also flow into your High-3 calculation for FERS; cash awards do not.

Are federal performance awards taxable?

Yes, fully. Cash awards are treated as supplemental wages. Under the flat supplemental-wage method, 2026 withholding is 22% federal plus 6.2% Social Security (up to the $184,500 wage base) plus 1.45% Medicare, about 29.65% withheld before state taxes; an agency may use the aggregate method instead, and your final tax depends on your marginal rate, not on the withholding. A $5,000 award nets roughly $3,518 after federal withholding alone. Time-off awards have no tax event when granted.

What does the OPM August 2025 awards memo change for Level 3 employees?

The August 2025 memo capped Level 3 awards at 1% of salary. OPM's September 21, 2026 memo replaced that for FY2026: Level 3 awards should not exceed 3% of basic pay, agencies may choose to pay Level 3 nothing, and at least 60% of each bonus pool still goes to Level 4 and Level 5. For a GS-13 Step 5 employee the Level 3 ceiling is $3,091 on national base pay, about $4,141 on DC locality pay (percentage awards run on locality-adjusted basic pay, 5 CFR 451.104(g)), against a theoretical $10,305 base-only ceiling before either memo.

Does my performance award affect my FERS pension calculation?

Cash awards do not. They are supplemental wages and do not count as basic pay for the High-3 calculation. QSIs do affect it. A QSI permanently raises your step and therefore your basic pay, which flows into your High-3 over time. That is one reason a QSI can beat a cash award for a mid-career employee, but it depends on how soon ordinary step increases would have got you there; compare the two paths.

Can an employee appeal a denied performance award?

Generally no, not through MSPB. Performance awards are discretionary, and denial alone is not an appealable action. Where a union contract is in effect, bargaining unit employees may grieve award disputes under negotiated grievance procedures, but many CBAs were terminated under EO 14251 in August 2025. Awards denied for a discriminatory or retaliatory reason may have remedy through the prohibited personnel practices framework at MSPB or EEOC.

Sources:

Award values are estimates based on OPM guidance ranges and 2026 base pay data. Individual agency practice varies. This is informational, not financial advice.