Purpose of the article is to develop proposals for further development of incentive payments system to employees of federal budgetary institutions. The authors consider the situation in this area after the transition of budgetary institutions to new conditions of remuneration and the implementation of the Program for the gradual enhancement of the remuneration system in state (municipal) institutions for 2012-2018. The conclusion is made that a number of tasks for reforming wages in the budgetary sphere have not been fulfilled. In many federal budgetary institutions, incentive payments are not tied to specific work results. Bonuses are paid simply for fulfilment of basic responsibilities. In addition, performance of employees is not assessed in many institutions. Based on the analysis of modern foreign practice of incentives and performance related pay, the authors of the article formulate the necessary conditions for the implementation of such a system in Russia's budgetary sectors. Specific proposals are presented on the application of bonuses for individual and collective results as a tool for increasing the efficiency and effectiveness of the activities of federal budgetary institutions.