Key Takeaways
- Your high three salary is the average of your highest-paid 36 consecutive months and forms the core basis for calculating federal annuity benefits.
- Not all types of pay count toward your high three, and special situations like part-time service or military time can impact your calculation in 2026.
Did you know that for most federal employees, the average of your highest-paid 36 consecutive months can determine your retirement income for decades? Understanding which pay counts (and which does not) is crucial in 2026. Here’s what you need to know about the high three salary and how it shapes federal retirement calculations for FERS and CSRS employees alike.
What Is the High Three Salary?
Official definition for FERS and CSRS
The “high three salary” is the government’s shorthand for the average basic pay you earned during your highest-paid 36 consecutive months of service. Under both the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS), this 36-month window is core to retirement calculations. Basic pay, in this context, is your rate of record—exclusive of overtime, bonuses, and many supplemental payments.
How the time period is determined
Your high three period doesn’t have to coincide with the calendar year. For most employees, the highest salary years occur at the end of their federal careers, often right before retirement. However, the 36 months can occur at any point as long as they are consecutive and represent the stretch with your highest average pay. Human resource offices typically identify this period using official payroll records.
Why Does the High Three Matter?
Impact on retirement annuity
Your high three average directly shapes your retirement annuity. For FERS, your annual pension is generally calculated as 1% of your high three for each year of creditable service (or 1.1% if you retire at age 62 with at least 20 years). For CSRS, the calculation uses a different percentage, but the high three principle remains central. Small differences in which pay is included or excluded can impact your benefit for as long as you receive payments.
Common misconceptions
It’s easy to assume that all pay—like overtime or bonuses—counts toward your high three. In reality, only specific types of pay are included. Another misconception is that the high three always occurs at career’s end, but periods earlier in your tenure might actually yield a higher average if, for instance, you temporarily held a higher-grade detail or acting position.
How Is High Three Calculated in 2026?
Eligible pay types included
In 2026, your high three calculation is based only on your basic pay rate for the position(s) you held. This includes locality pay and any adjustments made to reflect cost-of-living or special rates attached to specific locations or job series. Official salary tables published by the U.S. Office of Personnel Management (OPM) remain the definitive source for what counts as basic pay.
Exclusions and adjustments
Pay types that do not count toward your high three include overtime, bonuses, cash awards, travel pay, and most forms of premium (such as night differential for most employees). Also, lump-sum payouts for unused annual leave are excluded. Changes in personnel rules or reassignment affecting your official position or salary can also adjust which amounts are factored into the average.
What Pay Counts Toward High Three?
Base salary components
Your base salary for the high three period consists of your official position salary, including regular step increases and applicable locality adjustments. Certain special rate schedules also qualify as basic pay if they are part of your official pay rate.
Overtime, bonuses, and special payments
While these can play a significant role in your total take-home earnings, overtime, performance bonuses, recruitment or retention incentives, and awards do not count toward the high three. This distinction is important and often misunderstood—you should rely strictly on the definition of basic pay as it appears on SF 50 personnel forms and OPM salary tables.
Are There Exceptions or Special Cases?
Part-time and variable schedules
If you’ve had periods of part-time work, your high three is still calculated based on your full-time equivalent rate—not the actual reduced amount you earned. However, your part-time service can affect your overall annuity through service credit calculations, so it’s crucial to review your employment records.
Military service impact
Credit for active-duty military service can affect your retirement calculation if you make a deposit for that time. If the military service occurred during your highest earning years and is creditable towards retirement, it can potentially increase your high three average. OPM guidelines outline the rules for counting this time.
Leave without pay considerations
Periods when you were on leave without pay (LWOP) for up to six months in a calendar year are generally treated as if you were in full pay status for high three calculations. Extended periods beyond that threshold may impact both your high three average and your total service credit, so careful review of personnel records is warranted.
How Does the High Three Affect Federal Pensions?
Role in FERS and CSRS annuity formulas
The high three average is the single largest factor in computing your base annuity under FERS and CSRS. For FERS, your pension is typically 1% (or 1.1% for certain cases) of your high three, multiplied by your years of creditable service. CSRS uses a more generous accrual rate but relies on the same basic high three methodology.
Interaction with Social Security in 2026
For FERS employees in 2026, your high three salary also influences your Special Retirement Supplement if you retire before full Social Security age. With the Windfall Elimination Provision repealed in 2025, there are fewer reductions or offsets impacting Social Security benefits related to federal service, but the core annuity still hinges entirely on your high three calculation.
What Should You Consider About High Three?
Record-keeping and documentation tips
It’s wise to regularly review your personnel forms (especially your SF 50s), earnings statements, and OPM records to verify salary history and ensure your high three is being properly identified. Errors can occur—even minor mistakes can have long-lasting consequences for your annuity. Keep personal files up to date, noting any changes to pay scales or assignments.
Addressing errors in salary computation
If you suspect your high three was calculated incorrectly—perhaps an exclusion or misclassification occurred—there are established procedures to request a review or correction. Contacting your employing agency’s HR office is usually the first step; they can provide records and initiate recalculation if necessary. OPM maintains authority to adjudicate disputes and issue definitive guidance.
