How Federal Pay is Calculated
Your total annual salary as a federal employee consists of two primary components: Base Pay and Locality Pay.
1. The General Schedule (GS) Grade
The "Grade" refers to the level of the position. For example, entry-level professional positions often start at GS-5 or GS-7, while mid-level management typically ranges from GS-12 to GS-15.
2. Within-Grade Steps
Each grade has 10 "Steps." New employees usually start at Step 1 and progress through the steps based on time-in-service and performance. Each step increase adds a fixed dollar amount to your annual base salary, as shown in the table above.
Total Pay = (Base Pay + Step Increases) × (1 + Locality Rate)
3. Locality Pay Areas
Locality pay is a percentage-based adjustment designed to help federal salaries stay competitive with the private sector in high-cost-of-living areas. In 2026, the "Rest of U.S." rate is 17.06%, while major hubs like San Francisco or DC command much higher percentages.