Texas State Employees Pay Raise 2026: Salary Schedules and Legislative Updates

Texas state employees are currently benefiting from salary adjustments finalized during the 89th Legislative Session, which shaped the 2026-2027 biennial budget. Most state workers received a structured cost-of-living adjustment or targeted merit-based increases effective September 1, 2025, with further provisions for performance-based rewards throughout the 2026 fiscal year to maintain competitiveness.

The landscape of public sector employment in Texas has shifted significantly as the state competes with a robust private sector. To mitigate high turnover rates in critical agencies, the Texas Legislature and the State Auditor’s Office (SAO) have implemented a more aggressive compensation strategy. This strategy focuses not just on across-the-board percentage hikes, but also on restructuring the state’s Classification Plan to ensure that salary ranges for Schedules A, B, and C reflect the actual cost of living in rapidly growing hubs like Austin, Dallas, and Houston.

The 2026-2027 Biennial Budget and Compensation Strategy

The Texas budget operates on a two-year cycle, and the 2026 fiscal year (which began September 1, 2025) represents the first half of the current biennium. Following the historic 5% increases seen in 2024 and 2025, the 89th Legislature focused on "targeted retention." This means that while some agencies received general across-the-board increases, others were granted "lump-sum" merit pools to reward high-performing staff.

The State Auditor’s Office biennial "Market Index Report" remains the primary driver for these changes. By comparing state job titles to private sector counterparts, the SAO identifies "under-market" positions. In 2026, the focus has heavily leaned toward IT professionals, engineers, and specialized healthcare roles within the Health and Human Services Commission (HHSC) and the Texas Department of Criminal Justice (TDCJ).

Agency Discretion and Funding

While the Legislature authorizes the "maximum" salary rates within a schedule, individual state agencies often have the discretion to move employees within those ranges based on performance and available budget. It is vital for employees to distinguish between a "legislative mandate" (an across-the-board raise) and an "agency-level merit increase."

Detailed Breakdown of Texas State Salary Schedules

Texas categorizes the majority of its workforce into three distinct salary schedules. Understanding which schedule you fall under is the first step in determining your eligibility for a 2026 pay raise.

Schedule A: Administrative Support, Maintenance, and Technical

This schedule covers non-exempt positions under the Fair Labor Standards Act (FLSA). These roles often see adjustments to the "minimum" and "maximum" of each salary group to ensure they don't fall below regional living wages. In 2026, significant focus was placed on elevating the floor for entry-level positions in groups A10 through A15.

Schedule B: Professional and Managerial

Schedule B includes exempt positions such as accountants, lawyers, and project managers. Pay raises in this category for 2026 have been largely driven by the "Salary Range Midpoint" strategy. The goal is to move seasoned professionals closer to the midpoint of their salary range, which historically lags behind the private sector by 10% to 15%.

Schedule C: Commissioned Peace Officers

Law enforcement compensation, including DPS troopers and Texas Parks and Wildlife game wardens, is handled separately. The 2026 pay scale for Schedule C includes longevity-based "steps" that ensure automatic increases based on years of commissioned service, independent of general legislative raises.

Eligibility and Exclusions for the 2026 Pay Increases

Not every person receiving a paycheck from the State of Texas is subject to the same pay raise rules. The General Appropriations Act (GAA) specifies who is covered under the statewide pay plan.

1. Line-Item Agencies: Employees at agencies like the Texas Department of Transportation (TxDOT) or the Texas Workforce Commission (TWC) generally follow the standard SAO salary schedules.
2. Higher Education: Staff and faculty at the University of Texas (UT) or Texas A&M systems are technically state employees, but their compensation is managed by their respective Boards of Regents. They do not automatically receive the same "across-the-board" raises as line-item agency employees unless specifically funded by the Legislature for that purpose.
3. Legislative and Judicial Branches: Salaries for the Governor, Lieutenant Governor, and members of the Judiciary are often set by specific statutes and may not fluctuate with the general workforce increases.
4. Contractors: Third-party vendors and independent contractors working within state buildings are not eligible for state employee pay raises, as their compensation is governed by their specific firm’s contract with the state.

Impact of Pay Raises on Retirement and ERS Benefits

A salary increase in 2026 has a compounding effect on an employee’s long-term financial health, specifically regarding the Employees Retirement System (ERS) of Texas. Because Texas uses a "defined benefit" plan for many of its employees, your "High 3" or "High 5" average salary determines your monthly annuity upon retirement.

For employees in Group 4 (those hired after Sept 1, 2022), the 2026 raises are particularly impactful. Since their retirement is based on a Cash Balance plan, the increased salary leads to higher monthly contributions and a larger state match, effectively accelerating their retirement savings.

Retirement Calculation Considerations

For veteran employees, a 5% raise in 2025 followed by a merit increase in 2026 can shift their "highest average salary" significantly. This is especially true for those nearing their "Rule of 80" or "Rule of 95," where the final three years of service are weighted heavily in the pension formula.

Geographic Pay Differentials in 2026

A significant point of discussion in the 2026 fiscal climate is the "Geographic Pay Differential." While Texas traditionally pays the same for a job title regardless of location, the high cost of living in Austin and the Dallas-Fort Worth metroplex has forced a re-evaluation.

While a formal statewide geographic pay scale has not been fully adopted for all agencies, several departments have utilized "Stipends" or "Retention Bonuses" specifically for employees in high-cost counties. If you are a state employee in Travis, Harris, or Bexar County, check your agency’s specific 2026 HR policy for location-based supplements that may be added to your base pay.

How to Verify Your New Salary Step or Rate

To ensure you are receiving the correct amount following the 2026 adjustments, you should consult the CAPPS (Centralized Accounting and Payroll/Personnel System) portal.

1. Log in to the CAPPS Employee Self-Service (ESS) portal.
2. Navigate to the "Payroll" or "Compensation" tab.
3. Review your "Compensation History" to see the effective date of the most recent increase.
4. Compare your "Hourly Rate" or "Monthly Salary" against the official SAO Salary Schedules for the 2026-2027 biennium.

If there is a discrepancy, the first point of contact should be your agency’s Payroll or Human Resources Department. Discrepancies often occur when an employee is promoted or transferred between agencies during a period when a legislative raise is being implemented.

Comparison: Public vs. Private Sector Compensation in Texas

In 2026, the gap between public and private pay in Texas remains a hurdle for recruitment. While state employees enjoy superior job stability and a robust benefits package (including 100% state-paid health insurance for full-time individuals), the raw take-home pay often trails behind.

• Public Sector Pros: Guaranteed pension, comprehensive health coverage, generous holiday schedules (13-17 days annually), and Public Service Loan Forgiveness (PSLF) eligibility.
• Public Sector Cons: Lower ceiling for executive-level pay, slower salary progression compared to private tech or finance, and dependency on legislative sessions for significant raises.
• Private Sector Pros: Higher initial base salary, performance-based bonuses, and faster promotion cycles.
• Private Sector Cons: At-will employment volatility, higher employee-paid healthcare premiums, and 401(k) plans that lack the lifetime security of a state pension.

Frequently Asked Questions

Will all Texas state employees get a raise in 2026?

Not necessarily, as 2026 is an even-numbered year between legislative sessions. Most "across-the-board" raises were implemented on September 1, 2025; however, many employees may receive merit raises in 2026 if their specific agency was granted a merit pool in the 89th Legislative Session budget.

Most general state employees saw a base increase at the start of the biennium (late 2025), and 2026 is the year where agency-specific performance rewards and "step" increases for law enforcement typically take effect.

How does the 2026 pay raise affect my ERS retirement?

Any increase in base pay directly increases your retirement contributions and, eventually, your retirement annuity. For those in the legacy defined-benefit plans, the 2026 raises will help increase your "highest average salary" calculation, which is the foundation of your monthly pension check.

Because retirement is calculated on gross pay, a 3% to 5% raise can result in hundreds of additional dollars per month in retirement, depending on your total years of service and the specific retirement group you belong to.

Do Texas university employees get the same raises as state agency staff?

University employees are often excluded from "across-the-board" legislative raises because their budgets are managed independently by university systems. While the Legislature may provide "formula funding" that can be used for raises, it is ultimately up to the university’s leadership to authorize pay increases for faculty and staff.

University staff should look for announcements from their specific Board of Regents or Chancellor regarding "COLA" (Cost of Living Adjustments) or merit pools for the 2026 academic year.

What is the "minimum floor" for Texas state pay raises?

In recent sessions, the Texas Legislature has often implemented a "floor," such as a $250 per month minimum increase. This ensures that lower-earning employees receive a meaningful raise that might be higher than a standard 5% percentage-based increase, specifically to help with rising housing and food costs.

For 2026, if you are in a lower salary bracket (Schedule A, groups 1-10), ensure you check if a flat-rate minimum was applied to your position, as this often provides a higher effective percentage than for executive-level staff.

Is there a difference between a "Step" increase and a "Merit" increase?

Yes, a "Step" increase is typically an automatic move to a higher pay level based on time in service, common in law enforcement (Schedule C). A "Merit" increase is a discretionary raise given by a supervisor or agency head based on exceptional job performance and available agency funding.

In 2026, most state agencies are relying more on merit-based rewards to retain top talent rather than automatic longevity-based raises, except for those specifically outlined in the state's law enforcement and judicial pay scales.

Navigating Future Compensation Trends

Looking forward to the 90th Legislative Session in 2027, the groundwork is already being laid by the State Auditor’s Office. Early reports suggest a continued push for "market-based" adjustments rather than flat percentages. This means that if you are in a high-demand field like cybersecurity, nursing, or civil engineering, your potential for a substantial raise in the next biennium is significantly higher than for general administrative roles.

To stay informed, employees should monitor the Texas State Auditor’s Office for upcoming classification reports and the Texas Comptroller of Public Accounts for revenue estimates that dictate how much the state can afford to spend on its workforce.