How do you calculate a pay raise?
For a percentage raise, multiply: new salary = current salary x (1 + raise %). For a fixed raise, add it, and the percentage is raise / current salary.
With the defaults, a 4% raise on $50,000 is $50,000 x 1.04 = $52,000. That is $2,000 more a year, $166.67 more a month and $38.46 more a week, before tax. A fixed raise of $2,500 on the same salary is $2,500 / $50,000 = 5%.
The calculator also asks for an inflation rate, because a raise is only half the story. Prices that rise over the same year take back part of it, and the page shows how much is left.
How do you calculate the percentage increase between two salaries?
Subtract the old salary from the new one and divide by the old: raise % = (new - old) / old x 100. On the Compare two salaries tab, $50,000 to $53,000 is $3,000 / $50,000 = 6%. Moving from $40,000 to $46,000 is 15%.
Always divide by the old salary. Going back from $53,000 to $50,000 is a fall of $3,000 / $53,000 = 5.66%, not 6%, because the starting point is larger.
The same asymmetry makes pay cuts hard to undo. After a cut, the raise needed to get back is old / new - 1:
| Pay cut | Raise needed to get back |
|---|---|
| 5% | 5.26% |
| 10% | 11.11% |
| 20% | 25.00% |
| 25% | 33.33% |
| 50% | 100.00% |
Enter a lower new salary on the compare tab and the page shows the recovery raise for your own numbers.
What is my raise worth after inflation?
The exact real raise is (1 + raise) / (1 + inflation) - 1. The quick version, raise - inflation, is close for small numbers and drifts as they grow.
Step by step for the defaults: 1 + 0.04 = 1.04; 1 + 0.03 = 1.03; 1.04 / 1.03 = 1.009709; minus 1 gives 0.97%. Subtraction says 1%. In money, $52,000 next year buys about what $50,485.44 buys now, so the raise adds $485.44 of buying power rather than $2,000.
At 3% inflation:
| Raise | Exact real raise | Raise minus inflation |
|---|---|---|
| 0% | -2.91% | -3.00% |
| 2% | -0.97% | -1.00% |
| 4% | 0.97% | 1.00% |
| 6% | 2.91% | 3.00% |
| 10% | 6.80% | 7.00% |
When both rates are high the gap widens: a 10% raise in a year of 20% inflation is a real cut of 8.33%, while subtraction says 10%. For growth on savings and investments over many years, the real return calculator applies the same formula with tax drag.
What raise do I need to keep up with inflation?
To stand still, the raise must equal inflation: a 3% raise in a 3% year leaves real pay unchanged. The salary that keeps pace is current salary x (1 + inflation), which is $51,500 for $50,000 at 3%. The calculator lists it under the result and draws it on the first chart beside your new salary.
To gain a set amount in real terms, multiply rather than add: raise needed = (1 + real gain) x (1 + inflation) - 1. A 2% real gain at 3% inflation needs 1.02 x 1.03 - 1 = 5.06%, not 5%.
A raise that only matches inflation is sometimes called a cost-of-living adjustment. Whatever it is called, the arithmetic is the same: compare the percentage with the inflation figure you trust, using the same twelve months for both.
Pay raises for hourly workers, per paycheck and per month
The percentage works the same on an hourly rate. A move from $20 to $21 an hour is 5%. At 40 hours a week for 52 weeks, that extra dollar an hour is 2,080 x $1 = $2,080 a year before tax.
To see a yearly raise per pay period, divide the yearly difference by the number of paydays. The default $2,000 raise is:
- $166.67 a month (12 paydays);
- $83.33 twice a month (24 paydays);
- $76.92 every two weeks (26 paydays);
- $38.46 a week (52 paydays).
These are gross figures. Take-home pay can rise by a different percentage from gross pay, because tax and other deductions depend on where you live and how much you earn; this page does not model them.
Worked examples in pounds and euros
- Pounds, a raise below inflation. A 3.5% raise on £32,000 gives £33,120, or £93.33 more a month. If prices rose 4% over the same year, the real change is 1.035 / 1.04 - 1 = -0.48%. Keeping pace would have needed £33,280, which is £160 more than the raise delivered.
- Euros, comparing two offers. Moving from €45,000 to €47,700 is a 6% raise, €225 more a month. At 2% inflation the real raise is 1.06 / 1.02 - 1 = 3.92%, and €47,700 next year buys about what €46,764.71 buys today.
Choose any of 24 currencies to format the figures. The percentages are identical in every currency and nothing is converted.
How do several raises in a row add up?
Raises compound, because each one is a percentage of a salary that already includes the last. Five raises of 4% multiply pay by 1.045 = 1.2167, an increase of 21.67%, not 20%. On $50,000 that is $60,832.65 after five years.
Inflation compounds the same way. Five years at 3% raise prices by 15.93%, so keeping pace would need $57,963.70. The $60,832.65 salary buys about what $52,474.77 buys today: a real gain of 4.95% over five years, close to five times the 0.97% from one year.
The calculator handles one raise at a time. For longer runs, use the result as the next current salary, with the inflation figure for that year.
How to calculate a pay raise in Excel or Google Sheets
Put the current salary in A2, the raise as a percentage in B2 and inflation in C2.
- New salary: =A2*(1+B2), which returns 52,000 for $50,000 and 4%.
- Percentage between two salaries, with the new salary in D2: =(D2-A2)/A2, formatted as a percentage; 50,000 and 53,000 give 6%.
- Real raise: =(1+B2)/(1+C2)-1, which returns 0.97% for 4% and 3%.
- Raise needed to recover a cut: =A2/D2-1.
Format the percentage cells to two decimal places so that 0.97% does not display as 1%.
Common mistakes, what this leaves out, and a glossary
- Dividing by the new salary. A raise is measured from the old figure.
- Adding percentages across years. Two 5% raises are 10.25%, not 10%.
- Comparing with the wrong inflation period. Set a yearly raise against inflation over the same twelve months.
- Ignoring hours. A salary rise that comes with longer hours can be a smaller raise per hour, or none.
Not modelled: income tax, social security or national insurance, pension contributions, bonuses, benefits, and any change in hours. To compare pay per hour, use the hourly to salary calculator.
Nominal raise: the percentage increase in pay as quoted. Real raise: the change in what that pay can buy, after inflation. Inflation rate: how much the general price level rises in a year. Keeps pace: the salary that buys exactly what the old one did. Cost-of-living adjustment: a raise set to match inflation.
Frequently asked questions
How do I calculate my new salary after a raise?
Multiply the current salary by 1 plus the raise as a decimal. A 4% raise on $50,000 is $50,000 x 1.04 = $52,000, which is $2,000 more a year before tax.
How do I work out the percentage raise between two salaries?
Divide the difference by the old salary. From $50,000 to $53,000 is $3,000 / $50,000 = 6%. Always divide by the old figure, not the new one.
What is a real raise?
The change in what your pay can buy after inflation. It is (1 + raise) / (1 + inflation) - 1, so a 4% raise with 3% inflation is a real raise of 0.97%.
Is a real raise just the raise minus inflation?
Only roughly. Subtraction gives 1% for a 4% raise and 3% inflation, against an exact 0.97%. The gap grows with the rates: a 10% raise in a year of 20% inflation is a real cut of 8.33%, not 10%.
What raise do I need to keep up with inflation?
A raise equal to the inflation rate keeps your buying power where it was. On $50,000 with 3% inflation that is $51,500. To gain 2% in real terms at 3% inflation you need 5.06%.
Is a 3% raise good when inflation is 4%?
It is a real pay cut. 1.03 / 1.04 - 1 = -0.96%, so the new salary buys a little less than the old one did, even though it is larger in money.
How much more a month is a 5% raise on $60,000?
A 5% raise on $60,000 adds $3,000 a year, which is $250 a month before tax. Take-home pay rises by less if tax and deductions take a share of the extra.
How big a raise do I need after a pay cut?
Divide the old salary by the new one and subtract 1. After a 10% cut you need 11.11% to get back; after a 20% cut, 25%.
Does this pay raise calculator include tax?
No. It works on gross pay. Tax and deductions depend on where you live and how much you earn, so take-home pay can change by a different percentage from the gross raise.
Can I use the calculator in pounds, euros or dirhams?
Yes. Choose from 24 currencies to format the amounts. The raise and inflation are percentages, so the real raise is the same in every currency; nothing is converted.
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Last reviewed 14 November 2026 by the NIFM Academy editorial team. Next review by 14 November 2027.
- Pay raise arithmetic, new salary = old x (1 + raise) or old + fixed raise; raise = (new - old) / old; raise needed after a cut = old / new - 1; shown in the working under every result. Checked 14 November 2026.
- Real raise (Fisher relation), real raise = (1 + raise) / (1 + inflation) - 1, beside the estimate raise - inflation; salary that keeps pace = old x (1 + inflation); raise for a target real gain = (1 + real) x (1 + inflation) - 1. Checked 14 November 2026.