North Carolina state employee raises are on hold. The state has been running on a continuation budget since July 1, 2025, which freezes salary schedules at their June 30, 2025 levels and blocks cost-of-living adjustments, step increases, and performance bonuses until lawmakers pass a new budget. In May 2026, legislative leaders announced a framework for the 2025–2027 biennium that would give general state employees at least a 3% raise, teachers about 8% on average, and much larger increases for law enforcement and corrections staff, plus one-time bonuses to cover the current year. None of it is law yet.
Why Your Pay Has Not Moved Since July 2025
North Carolina budgets in two-year cycles, with a full biennial budget adopted in odd-numbered years.1North Carolina Office of State Budget and Management. Budget 101 When the General Assembly does not enact a new budget before July 1, spending reverts to a continuation budget that holds recurring expenditures at the prior year’s level.
The key statute for workers is G.S. 143C-5-4(b)(5). Under a continuation budget, the salary schedules and specific salaries from the prior fiscal year stay in effect, and no cost-of-living adjustments, merit pay, step increases, or performance bonuses can be issued without explicit legislative authorization.2North Carolina General Assembly. North Carolina Code Chapter 143C – Section 143C-5-4 That freeze covers everyone on state payroll, including teachers and law enforcement officers who follow their own statutory pay plans. Every paycheck since July 2025 reflects the same rate you earned on June 30, 2025.
The last raise to actually reach paychecks was the 3% across-the-board increase authorized by Session Law 2023-134 for the 2024–2025 fiscal year.3North Carolina General Assembly. Session Law 2023-134 That amount folded into base salary, so it still shows up in your current pay. Nothing has been added on top since.
What the Proposed 2025–2027 Framework Would Pay
Legislative leaders from both chambers announced their framework in May 2026. The deal is not yet law and the numbers can shift as the full appropriations bill is drafted, but here is what negotiators agreed to:
- General state employees: at least a 3% salary increase
- Teachers: raises averaging about 8%
- Highway Patrol troopers: 17.7% increase
- Other state law enforcement: 13% increase
- Correctional and prison workers: 15.4% increase
- Probation and parole officers: 10.1% increase
The gap between these numbers and the governor’s earlier proposal shows how much movement is still possible. The governor had recommended a 2% base raise combined with a $1,000 bonus and an additional 2% in targeted labor-market adjustments for hard-to-fill positions.4North Carolina General Assembly. Budget Recommendations 2025-27 Treat every figure as preliminary until the budget passes both chambers and is signed.
Teachers are paid on a monthly schedule the General Assembly sets directly. Under the current schedule from Session Law 2024-39, a beginning teacher with a bachelor’s degree earns $4,100 per month, or $49,200 a year, rising with experience to $5,595 per month at 25 or more years.5North Carolina General Assembly. Session Law 2024-39 An 8% average increase would push starting monthly pay to roughly $4,800, with higher dollar amounts at each experience step rather than a uniform flat percentage.
When the Raises Would Reach Your Paycheck
In a normal budget cycle, raises take effect July 1 and appear in the first paycheck of the new fiscal year. When the budget is late, the appropriations act typically directs the state budget director to adjust allotments back to July 1, making the raises retroactive.2North Carolina General Assembly. North Carolina Code Chapter 143C – Section 143C-5-4
This time is different. The framework says the percentage raises would not be retroactive to the 2025–2026 fiscal year. They would begin with the 2026–2027 fiscal year in July 2026. To cover the current year, all state employees would receive a one-time bonus: $1,750 for those earning less than $65,000, and $1,000 for those earning $65,000 or more.
A bonus is not the same thing as a raise. It arrives once and does not compound into future paychecks or into your retirement benefit calculation. If the framework holds, you should expect a lump-sum payment first and the percentage increase in your regular check starting in July 2026.
Any lump-sum payment is subject to the same federal income tax withholding, Social Security tax (up to the $184,500 wage base for 2026), and state retirement contributions as regular earnings.6Social Security Administration. Contribution and Benefit Base A large one-time check can temporarily push you into a higher withholding bracket for that pay period, though excess withholding typically returns as a refund at tax time.
Who Qualifies
The eligibility rules from the 2023–2025 budget are the best template for how the next round will work. Session Law 2023-134 required employees to hold a permanent full-time or permanent part-time position and to be on the payroll in that role as of June 30 before the new fiscal year began.3North Carolina General Assembly. Session Law 2023-134
Employees in time-limited and probationary roles also qualified, which surprises people. Temporary hires, independent contractors, and anyone who started after the cutoff did not. The reasoning is straightforward: if you were on payroll at the old rate, you get bumped to the new rate; if you were hired after the effective date, your starting salary already reflects the updated pay range. The final 2025–2027 budget could modify these rules, but the June 30 cutoff and the permanent-position requirement have appeared in nearly every recent appropriations act.
How a Raise Changes Your Retirement and Health Premium
Most state employees contribute 6% of gross salary to the Teachers’ and State Employees’ Retirement System. Any base salary increase raises that deduction, but it also raises your eventual pension, since TSERS calculates the benefit from your four highest consecutive years of salary. The employer contribution rate rose to 24.67% effective July 1, 2025, though that cost comes out of agency budgets, not your paycheck.
If you contribute to a 401(k), 457(b), or 403(b) through the NC supplemental retirement program, a raise creates room to increase deferrals without shrinking take-home pay. The 2026 elective deferral limit for 457(b) and 403(b) plans is $24,500, with an $8,000 catch-up available at age 50 and older.
The State Health Plan is also shifting for 2026. The plan’s board approved salary-based premiums, so lower-paid employees pay less for the same coverage.7North Carolina State Treasurer. North Carolina State Health Plan Premiums Finalized for 2026 For some workers, a raise that crosses into a higher premium tier will produce a smaller net gain than the headline percentage suggests. Check where your new salary falls before assuming the full 3% lands in your bank account.
How the Numbers Compare to Inflation
Wages and salaries for state and local government workers nationally rose 3.3% over the 12 months ending December 2025, according to the Bureau of Labor Statistics Employment Cost Index.8U.S. Bureau of Labor Statistics. Employment Cost Index A 3% base raise for general NC state employees would land just under that average, while the targeted increases for law enforcement, corrections, and teachers would run well above.
The Social Security cost-of-living adjustment for 2026 is 2.8%, so a 3% raise barely clears inflation in real terms. And it follows a year with no raise at all. Two years of price increases against one year of adjustment means purchasing power has fallen even if the eventual percentage looks reasonable. The one-time bonus softens the current-year gap but does not compound, so it will not close that hole in your long-run earnings.