Compensation Trends & Salary Guidance 2026

As budget pressures remain elevated and economic uncertainty persists, many organizations are taking a cautious but strategic approach to salary increases as we enter 2026. According to the  WorldatWork Salary Budget Survey, U.S. employers are projecting mean salary-increase budgets of 3.6% for 2026, a slight pull-back from the previous year.  WorldatWork Similarly, a report from Willis Towers Watson found that average pay increase budgets are expected to remain at 3.5%, the same level as in 2025, reflecting a trend of “flat” increase budgets.  CFO+1 For hiring companies and CFOs, this means the margin for across-the-board raises is limited  and the emphasis is shifting toward targeted increases, performance-based pay, and selective budgeting to maintain competitiveness without overextending spend.

• Prioritizing top performers and critical roles: With overall salary budgets holding flat at around 3.5%–3.6%, companies are moving away from broad, across-the-board increases and instead directing more dollars toward high-impact roles and top-performing employees. (Willis Towers Watson via CFO.com)
• Shifting toward variable pay: Many employers are increasing their use of bonuses, incentive pay, and profit-sharing to stay competitive without raising fixed salary costs, which CFOs report as a key lever when budgets are tight. (Willis Towers Watson via CFO.com)
• Using strategic adjustments instead of COLAs: Rather than large cost-of-living increases, employers are turning to targeted pay adjustments, skill-based premiums, and market-corrections where needed, staying within the average 3.6% overall increase budgets projected by U.S. companies for 2026. (WorldatWork)