Each year, our Total Rewards + Compensation Consulting practice keeps a close eye on reported trends in annual salary increase budgets. The research and survey data available at this time indicates that salary increase budgets will decrease slightly in 2026 based on three primary survey sources that have been published to date. Key findings include:
- Overall, salary increase budgets for 2026 are averaging around 3.5%
- Other global consulting firm surveys also report data that predicts a 3.5% increase, with one indicating it may be as low as 3.3%
Factors that impacted participating organizations’ budget considerations include anticipation of economic recession, cost management, and inflation.
How to Respond to the Data
The salary budget increase data shared here reflects all industries and sizes, and budgets can vary based on several factors including:
- Industry and market for talent
- Growth and turnover in positions
- External economic forces
- Other unique attributes of your organization
As you gather data and finalize your salary budget, be sure to consider the full total rewards budget and prioritize your investments based on your short- and long-term goals related to workforce planning and development:
- Cost of benefit renewals
- Retirement plan changes or enhancements
- Paid time off and other leave of absence program updates
- Other rewards programs such as vehicle related benefits, recognition programs, and other employee perks
Finally, as you plan to allocate your salary increase budget, be sure to carve out or seek additional funds to support compensation growth that may occur outside of the formal salary increase budget process, including: higher starting pay rates, the addition of new positions, market and equity adjustments, and incentive compensation payouts. Not sure where to start? Contact the Compensation & Total Rewards Consulting team at The MJ Companies for help.
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