The 2025 locality pay increase is a cost-of-living adjustment for federal employees in certain geographic areas where the cost of living is higher than the national average. The locality pay increase is determined by comparing the cost of living in a specific geographic area to the cost of living in the Washington, D.C. area. The locality pay increase is then applied to the base pay of federal employees in that geographic area.
The locality pay increase is important because it helps to ensure that federal employees are paid fairly for their work. The locality pay increase also helps to attract and retain qualified employees in high-cost areas. The locality pay increase has been in place since 1990, and it has been updated every year since then.