Celebrate increment, finally, in pay (4)
I believe the answer is:
fete
'celebrate' is the definition.
('fete' can be a synonym of 'celebrate')
'increment finally in pay' is the wordplay.
'finally' indicates one should take the final letters.
'in' means one lot of letters goes inside another.
'pay' becomes 'fee' (**).
The final letter of 'increment' is 't'.
't' inserted into 'fee' is 'FETE'.
(Other definitions for fete that I've seen before include "Fund-raising function; festival" , "Festival, fiesta" , "Wine and dine" , "Outdoor get-together" , "Holiday festival" .)