President Donald Trump’s alternative pay plan for 2027, sent to Congress on August 26, holds civilian federal base pay and locality pay at their 2026 levels while directing a tiered raise of 5 percent to 7 percent for uniformed service members starting January 1, 2027. The freeze is not simply the absence of a raise. It cancels a formula already written into federal pay law that, left alone, would have delivered a far larger increase to civilian employees this year. What one workforce is not getting and what another is getting come from the same letter, and neither number is final.
The automatic raise the freeze cancels
Federal civilian pay law requires an automatic increase every January unless the President submits an alternative plan to Congress explaining why one is not appropriate. In the letter, addressed to House Speaker Mike Johnson and signed August 26, Trump used that authority to cancel what current law otherwise required for 2027: an average locality pay increase of 20.6 percent, at a first-year cost of $26 billion, plus a separate 3.1 percent across-the-board raise to base General Schedule pay.
The letter frames that cancellation as fiscal discipline rather than a routine pause. Trump writes that “Federal agency budgets cannot sustain such irresponsible increases,” and ties the decision to what he calls “the Biden Administration’s giant inflation spree,” arguing that a raise of that size would be unacceptable while household budgets are still adjusting to years of higher prices.
The freeze is also a step beyond its immediate predecessor. For 2026, Trump’s own alternative plan, sent the prior August, set locality pay increases at zero but still allowed a 1.0 percent increase to base pay, according to that year’s letter to Congress. The 2027 version freezes both halves of civilian pay together, leaving no part of the General Schedule to move at all.
The freeze also applies evenly. A General Schedule employee in a high-cost locality area and one in a lower-cost area see the identical result for 2027: no adjustment at all. That uniformity is itself a departure from the canceled formula, which would have varied by locality rather than applying one flat outcome to every civilian pay table.
The letter invokes two separate legal authorities for that cancellation, 5 U.S.C. 5303(b) and 5 U.S.C. 5304a, because base General Schedule pay and locality pay are adjusted under separate provisions of federal pay law even though the letter freezes both together. Citing both is what lets Trump zero out the base increase and the locality increase in a single decision rather than addressing them in two separate actions.
The freeze changes one line, not the rest of a budget: The 2027 letter leaves civilian base and locality pay exactly where 2026 set it, a single line in a much larger household budget. Compare the five kinds of property-tax relief against the application log in The Senior Property Tax & Home-Cost Relief Kit.
How the military’s raise moves instead
Military basic pay works under its own statute, 37 U.S.C. 1009, which likewise defaults to an automatic adjustment pegged to the Employment Cost Index. The Congressional Research Service put that default figure for 2027 at 3.6 percent, and estimated that funding a tiered 7-6-5 structure instead would cost an additional $5.8 billion. Trump’s letter uses the same kind of alternative-plan authority to replace the 3.6 percent default with 7.0 percent for grades E-1 through E-5, 6.0 percent for grades E-6 through O-3, and 5.0 percent for O-4 and above, effective January 1, 2027.
The $5.8 billion figure did not originate in the August letter itself. It first appeared in the administration’s fiscal year 2027 budget request, submitted earlier in the year, as the added cost of moving from the automatic 3.6 percent to the tiered structure; the August letter reiterates the same tiers as a formal alternative-pay submission to Congress rather than introducing a new number.
The tiering favors the lowest-paid ranks by design: junior enlisted service members receive the largest percentage on top of the smallest base salaries, while the most senior officers receive the smallest percentage on top of the largest. It is the same logic Trump’s letter applies to civilian pay in reverse, freezing every General Schedule grade equally regardless of how large or small the paycheck already is.
The contrast between the two decisions sits inside one document. The letter that finds no room in the budget for any civilian increase asks Congress, in the same breath, to fund an additional $5.8 billion for a military raise beyond what the automatic formula already requires. Both rest on the fiscal-responsibility language Trump uses to justify the freeze, applied to opposite conclusions for two different federal workforces.
A plan, not a final answer
Even the military number is not settled. The Congressional Research Service notes that the House Armed Services Committee’s version of the annual defense authorization bill matches the President’s 7.0-6.0-5.0 structure, while the Senate Armed Services Committee’s version would provide only the automatic 3.6 percent, the same default the letter is trying to replace. Which figure reaches paychecks in January depends on how the two chambers resolve that difference in conference, not on the letter by itself.
The civilian freeze faces a version of the same test. Congress has overridden a presidential alternative pay plan before: in early 2019, lawmakers rejected a Trump-proposed freeze and enacted a 1.9 percent raise instead through appropriations legislation passed after the letter was sent. Nothing in the pay statutes prevents Congress from doing the same to either 2027 number before it takes effect.
Absent new legislation, the figures in the August 26 letter are what agencies expect to carry into the executive order that has historically converted past alternative pay plans into actual pay tables late in the year. Until then, the only rate with legal force is the one Congress already set for 2026; the freeze and both military tiers remain what President Trump asked for, not what either workforce will be paid in January.
What Doesn’t Freeze When Federal Pay Does
The alternative pay plan President Trump sent Congress on August 26 holds civilian base and locality pay at 2026 levels into 2027, a decision framed around fiscal restraint that leaves property taxes, utility rates and other fixed costs to keep moving on their own calendars. For anyone counting on next year’s raise to cover this year’s bills, the freeze is the part of the story that doesn’t come with a new form or a new deadline.
The Senior Property Tax & Home-Cost Relief Kit is an 11-page kit built around a credit that reaches renters as well as owners, for anyone whose fixed costs are not standing still while a federal paycheck does.
See that credit and the other relief options in The Senior Property Tax & Home-Cost Relief Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
