A raise can be described three ways: a percentage, a new salary or rate, or a dollar amount. The numbers are easy to convert between once you know the two basic formulas. It also helps to translate a raise into what you will notice: the change in each paycheck.
The two formulas
New pay = current pay × (1 + raise % ÷ 100)
Raise % = (new pay − current pay) ÷ current pay × 100
Example: a 3.5% raise on $48,000
- $48,000 × 1.035 = $49,680.
- The raise is $1,680 a year.
- Per month: $1,680 ÷ 12 = $140.
- Per biweekly paycheck: $1,680 ÷ 26 = $64.62, before taxes.
Example: from $18.00 to $19.25 an hour
- Increase: $19.25 − $18.00 = $1.25 an hour.
- Percentage: $1.25 ÷ $18.00 × 100 = 6.94%.
- At 40 hours a week for 52 weeks: $1.25 × 2,080 = $2,600 a year.
Raises compound
Each raise applies to your new pay, so the dollar amounts grow over time. Ten yearly raises of 3% on $48,000 bring you to about $64,508, not the $62,400 you would get by adding 3% of the starting salary ten times.
| Year | Salary with 3% raises | Raise that year |
|---|---|---|
| Now | $48,000.00 | |
| 1 | $49,440.00 | $1,440.00 |
| 2 | $50,923.20 | $1,483.20 |
| 3 | $52,450.90 | $1,527.70 |
| 5 | $55,645.16 | |
| 10 | $64,507.99 |
Raises and take-home pay
A raise is an increase in gross pay. Your take-home pay rises by less, because income tax, Social Security and Medicare, and some benefit deductions grow with your pay. The difference depends on your situation; see gross pay vs net pay.
Raises and prices
A raise in dollars is not the same as a raise in buying power. If prices rise faster than your pay over the same period, your pay buys less even after a raise. Comparing your raise percentage with the change in your own costs is a simple way to judge it.
Tools
- Raise calculator: new pay, what the raise adds per paycheck, and a multi-year projection.
- Hourly to salary calculator and salary to hourly calculator: convert your new pay between hourly and annual.
About this guide. Written for US employees as general information, not legal or tax advice. Rules can differ by state, employer, and contract. See our methodology and disclaimer.