Locality pay is a type of pay adjustment that is given to federal employees who work in certain geographic areas where the cost of living is higher than the national average. The purpose of locality pay is to ensure that federal employees can maintain a comparable standard of living regardless of where they are assigned to work.
Locality pay rates are determined by comparing the cost of living in a particular area to the cost of living in the Washington, D.C. metropolitan area. The Office of Personnel Management (OPM) is responsible for setting locality pay rates, and they are updated on an annual basis.
