The U.S. Postal Service recently filed two formal requests with the Postal Regulatory Commission seeking changes to how postage rates are regulated for market dominant products, including First-Class Mail, Marketing Mail and Periodicals.
USPS says the current rate system has limited its ability to keep pace with rising costs, contributing to ongoing multibillion-dollar annual losses and tight cash flow. The proposals are aimed at giving USPS more pricing flexibility over the next several years while it continues cost-cutting efforts and explores new revenue strategies.
What Is Being Proposed?
USPS outlined two potential approaches for future rate setting:
- Replace the current price cap system with a five-year regulatory period that would allow USPS more discretion to set rates within agreed-upon limits, while still being monitored by the PRC, or
- Keep the price cap system but reset it, providing USPS with additional pricing authority equal to roughly 22 percent over several years to help close the gap between costs and revenues.
If either approach is approved, USPS is proposing a first round of increases beginning in January 2027. Average Market Dominant rates would rise about 7.4 percent, with category caps of up to 12 percent for Periodicals and lower caps for other mail classes.
Liquidity Relief Request
In a separate but related filing, USPS asked the PRC to ease restrictions on how it uses certain postage revenues tied to retiree benefit funding, namely funding pensions and health benefits for future retirees. USPS says removing these conditions would improve near-term cash flow while longer-term rate reforms are under review.
What This Means for Mailers
While no immediate changes are coming, these filings signal continued upward pressure on Market Dominant postage rates, particularly for Periodicals. They also suggest USPS may pursue larger or more flexible increases beyond the traditional inflation-based model starting in 2027.Walsworth will continue monitoring this proceeding and share updates as the PRC reviews the proposals and outlines next steps. If you’d like to learn more, get in touch with one of our mailing experts today.
