Salary Raise Calculator

How to calculate a salary raise

The formula is: New salary = Current salary × (1 + Raise% ÷ 100). The dollar increase is simply Current salary × (Raise% ÷ 100).

For example, a $60,000 salary with a 5% raise: $60,000 × 1.05 = $63,000. The increase is $3,000 per year, $250 per month, or $1.44 per hour — before tax.

How to find your raise percentage from two salaries

If you know the old and new figure but need the percentage: Raise% = (New − Old) ÷ Old × 100. Going from $58,000 to $62,500: ($62,500 − $58,000) ÷ $58,000 × 100 = 7.76%. This is the same formula used by the profit margin calculator when measuring how much revenue has grown after a cost change.

What counts as a good salary raise?

Raise %	What it typically means
1–2%	Below inflation — a real-terms pay cut in most years
3–4%	Standard cost-of-living adjustment; roughly keeps pace with inflation
5–7%	Above average; reflects strong performance or a market correction
8–15%	Significant — typical for promotions or a competing offer
15%+	Major step change — usually tied to a role change or new employer

Raise vs inflation: real purchasing power

A 3% raise when inflation runs at 4% means your purchasing power fell by roughly 1% — you can buy less with your new salary than you could with your old one. To find your real raise: Real raise% = ((1 + Raise%) ÷ (1 + Inflation%)) − 1, expressed as a percentage. If your raise was 4% and inflation is 3.5%, your real increase is only about 0.48%. The percentage change calculator can model the difference between any two figures.

Raise vs bonus: which is worth more?

A raise permanently increases your base salary — every future paycheck, every future raise, and often your pension contributions reflect it. A bonus is a one-time payment that doesn’t change your base. A 5% raise on $60,000 is worth $3,000 every year going forward, compounding with future raises. A $3,000 bonus is paid once. Over a 10-year career, the raise is worth far more in cumulative terms. If your employer offers a bonus instead of a raise, it’s worth calculating the long-term difference before accepting.

The compounding value of a raise

Raises compound. A $60,000 salary with consistent 4% annual raises grows significantly over time. After 5 years: $60,000 × 1.04^5 = $72,998. After 10 years: $60,000 × 1.04^10 = $88,814. After 20 years: $131,334. The same salary with 3% raises reaches only $109,454 after 20 years — a $21,880 gap from just 1% less per year compounded over two decades. This is why negotiating even small additional percentages at each review has outsized long-term impact.

Cost-of-living adjustments (COLA)

A cost-of-living adjustment (COLA) is a raise specifically designed to keep pace with inflation rather than reward performance. Many union contracts, government salaries, and Social Security payments include automatic annual COLAs tied to the Consumer Price Index (CPI). A 4% COLA in a year with 4% inflation keeps your purchasing power flat — you are not better off, you are just not worse off. COLAs are distinct from merit raises (which reward performance above inflation) and promotions (which reflect a change in role). When evaluating a raise offer, it helps to separate the COLA component from the merit component: a 5% raise when inflation is 4% is effectively a 1% real raise — still positive, but less impressive than the headline number suggests.

How to negotiate a higher raise

The most effective negotiation combines market data with documented impact. Research the market rate for your role using salary surveys, LinkedIn Salary, and Glassdoor — employers expect you to know this number. Quantify your specific contributions: revenue generated, costs reduced, projects delivered. Request a specific number above your target to leave room to negotiate down to what you actually want. The conversation is easier before a review cycle than after a number has been offered. If a budget freeze prevents an immediate raise, negotiate the timing of the next review, a one-time bonus, additional benefits, or a promotion that resets the salary band.