Planned salary budgets for 2026 are looking a lot like actual salary budgets this year.
That’s according to recent research by British insurance brokerage Willis Towers Watson. Across a survey of 1,557 organizations that are either headquartered or have operations in the U.S., the median salary budget for 2026 is expected to increase by 3.5%. Notably, that’s the same level of actual salary budget increases in 2025.
As finance chiefs know, budgets can and do often change for any number of reasons, so it’s an open question whether that 3.5% increase will even come through in 2026. Consider the fact that, in WTW’s same survey at the end of 2024, U.S. participants projected a salary budget increase of 3.9%. And that came after an actual budget increase of 4% in 2024.
This all comes against the backdrop of continued economic uncertainty, at home and abroad. “While concerns about inflation continue to influence spending for many organizations and remains a top factor in influencing budget change, the percentage of survey respondents citing inflation as a cause of budgetary adjustments has, again, dropped notably in the past year,” they wrote in a briefing on the July report.
Indeed, in WTW’s December 2024 report, 39% of respondents said “inflationary pressures” were causing them to adjust their salary budgets. Fast-forward to July of this year, and that number dropped to 22%.
Forty-one percent of respondents in the July survey cited “anticipated recession or weaker financial results (actual or forecast)” as their top reason for adjusting salary budgets.
The decline in participants who cited inflation as the top driver of salary budget adjustments is meaningful, WTW researchers said. Brittany Innes, director of rewards data intelligence at WTW, said it “suggests a shift in employer priorities.”
“After several years of reacting to rising consumer prices, organizations appear to be focusing more on market competitiveness and internal equity,” Innes said in an email. “It’s also a signal that many employers likely feel they’ve ‘caught up’ with inflation and are now making more selective, strategic pay decisions rather than allocating specific budget to making broad-based adjustments.”
It’s worth noting, too, that about 34% of U.S. participants said they had already raised starting salaries. Yet just 7% plan to do the same over the next year. Innes said that’s “likely telling us that this isn’t a tactic that feels warranted under current conditions.”
“Organizations are saying ‘we made this shift already,’ and they made it during a period when inflation was the top concern,” she noted. “Employers in the U.S. are also starting to feel some relief when it comes to attracting and retaining talent.”
Innes added that finance departments should now consider closer collaboration with other departments.
“For CFOs, this is a critical moment to deepen collaboration with HR,” she said. “Understanding how compensation strategy ties to broader business goals is essential for managing cost, competitiveness and long-term value.”
