From a percentage to a paycheck
The arithmetic of a raise is simple: your new salary is your current salary multiplied by one plus the raise percentage. A 5% raise on a $60,000 salary lifts it to $63,000 — an extra $3,000 a year, or $250 a month. The calculator does this both ways: tell it the percentage and it shows the dollar increase, and it breaks that increase down into annual and monthly figures so you can see what actually lands in your pay cheque.
The raise formula
New salary = current salary × (1 + raise%)
Real raise = (1 + raise) ÷ (1 + inflation) − 1
where raise and inflation are expressed as decimals. The first line gives the headline, nominal increase; the second strips out the effect of rising prices to reveal what your raise is worth in terms of buying power.
Worked example
Take a $60,000 salary that gets a 5% raise in a year when inflation runs at 3%:
| Step | Amount |
|---|---|
| Current salary | $60,000 |
| + 5% raiseabout $250 more a month, before tax | $3,000 |
| Real raise after 3% inflation(1 + raise) ÷ (1 + inflation) − 1 — the genuine gain in buying power | 1.94% |
| = New salaryup $3,000 a year on the old salary | $63,000 |
Computed with this calculator's default settings — open the tool above and you'll see the same numbers, then change the salary, raise, or inflation rate to match your own offer.
Why the nominal raise overstates your gain
The single most important idea here is that a raise and your buying power are not the same thing. If you receive a 5% raise in a year when inflation is also 5%, your real raise is zero — the larger number on your payslip buys exactly what it did before. Worse, a raise below the inflation rate is effectively a pay cut: your income rises in dollars but falls in what those dollars can purchase. This is why the calculator always reports the real, inflation-adjusted raise alongside the nominal one. To see how quickly prices erode value over time, use ourinflation calculator.
Three things to keep in mind
- This is a gross, pre-tax figure. The increase you see here is before tax. Because a raise is taxed at your marginal rate, the amount that actually reaches your bank account is smaller — apply your marginal rate, or estimate the net figure with ourtake-home pay calculator.
- A raise compounds. A one-time raise is not a one-time event. Every future percentage raise builds on the higher base, so a bigger raise now is worth far more over a career than the immediate dollar figure suggests. Negotiating an extra percent today quietly lifts every raise that follows.
- Compare against inflation, not zero. The benchmark for a good raise is not whether the number went up but whether it beat inflation. Judge every offer against the prevailing inflation rate to know whether you are genuinely getting ahead. If you are weighing a new role, thesalary calculatorhelps you compare total pay on a like-for-like basis.
Frequently asked questions
How do I calculate a pay raise?
Multiply your current salary by one plus the raise percentage expressed as a decimal. A 4% raise on a $60,000 salary is $60,000 × 1.04 = $62,400, an increase of $2,400 a year or $200 a month. To work in the other direction, divide the dollar increase by your current salary to get the percentage: a $2,400 raise on $60,000 is 2,400 ÷ 60,000 = 0.04, or 4%.
What is a real (inflation-adjusted) raise?
A real raise is what is left of your nominal raise after prices have risen. The formula is (1 + raise) ÷ (1 + inflation) − 1. If you get a 5% raise while inflation is 5%, your real raise is (1.05 ÷ 1.05) − 1 = 0%: your paycheck is bigger but it buys exactly what it did before. Any raise below the inflation rate is a real-terms pay cut, because your money loses ground even though the number on your payslip went up.
Is a 3% raise good?
It depends entirely on inflation. When inflation is around 2%, a 3% raise is a real gain of roughly 1%, which is a modest but genuine improvement in buying power. When inflation is running at 5% or 6%, that same 3% raise is a real pay cut of two to three percent, because prices are climbing faster than your income. Always compare the raise to the prevailing inflation rate rather than judging the headline number on its own.
How much of my raise goes to taxes?
A raise is taxed at your marginal rate, which is the rate on the top portion of your income, not your average rate. If your marginal rate is 30%, roughly 30 cents of every extra dollar goes to tax and you keep about 70 cents. This means the take-home value of a raise is always smaller than the gross figure. The raise calculator works in gross, pre-tax terms, so apply your marginal rate to estimate the net amount you will actually see.
How do I calculate the percentage raise between two salaries?
Subtract the old salary from the new one, divide the difference by the old salary, then multiply by 100. Moving from $50,000 to $55,000 is (55,000 − 50,000) ÷ 50,000 × 100 = 10%. The key is to divide by the original salary, not the new one, because the raise is measured relative to where you started.
Disclaimer: This calculator is foreducation and illustration only. It works in gross, pre-tax terms and uses a single inflation rate to estimate real value; actual take-home pay depends on your tax situation, and inflation varies over time. Nothing here is financial, tax, or career advice.