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How to Calculate Your Pay Raise: Step by Step Guide

Published: June 21, 2026 · 5 min read

Whether you just got a raise or you are negotiating one, knowing exactly how much more money you will take home is essential. This guide shows you how to calculate your pay raise using simple formulas, with real examples for every situation.

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The Basic Pay Raise Formula

To calculate your new salary after a percentage raise, use this formula:

New Salary = Current Salary × (1 + Raise Percentage / 100)

To find the dollar amount of the increase:

Increase = Current Salary × (Raise Percentage / 100)

Example 1: 5% Raise on $50,000

  1. Current salary: $50,000 per year
  2. Raise percentage: 5%
  3. Increase: $50,000 × 0.05 = $2,500
  4. New salary: $50,000 + $2,500 = $52,500
  5. Monthly increase: $2,500 / 12 = $208.33
  6. Weekly increase: $2,500 / 52 = $48.08

Example 2: 3% Raise on $75,000

  1. Current salary: $75,000 per year
  2. Raise percentage: 3%
  3. Increase: $75,000 × 0.03 = $2,250
  4. New salary: $75,000 + $2,250 = $77,250
  5. Monthly increase: $2,250 / 12 = $187.50

How to Calculate a Dollar Amount Raise

If your raise is a flat dollar amount (e.g., $2 per hour or $3,000 per year), the calculation is simpler:

New Salary = Current Salary + Raise Amount

Example: $2/Hour Raise on $20/Hour

  1. Current hourly rate: $20/hour
  2. Raise: $2/hour
  3. New hourly rate: $20 + $2 = $22/hour
  4. Annual increase (40 hrs/week): $2 × 40 × 52 = $4,160/year
  5. Equivalent percentage raise: ($2 / $20) × 100 = 10%

How to Calculate Your Raise Percentage

If you know your old and new salary but not the percentage, use this formula:

Raise % = ((New Salary - Old Salary) / Old Salary) × 100

Example: From $50,000 to $55,000

  1. Old salary: $50,000
  2. New salary: $55,000
  3. Difference: $55,000 - $50,000 = $5,000
  4. Percentage: ($5,000 / $50,000) × 100 = 10%

Pay Raise Quick Reference Table

Current Salary3% Raise5% Raise10% Raise
$30,000$30,900$31,500$33,000
$40,000$41,200$42,000$44,000
$50,000$51,500$52,500$55,000
$60,000$61,800$63,000$66,000
$75,000$77,250$78,750$82,500
$100,000$103,000$105,000$110,000
$120,000$123,600$126,000$132,000

Hourly Wage Raise Examples

Current Rate$1 Raise$2 Raise$3 Raise
$15/hr$16/hr ($2,080/yr)$17/hr ($4,160/yr)$18/hr ($6,240/yr)
$20/hr$21/hr ($2,080/yr)$22/hr ($4,160/yr)$23/hr ($6,240/yr)
$25/hr$26/hr ($2,080/yr)$27/hr ($4,160/yr)$28/hr ($6,240/yr)
$30/hr$31/hr ($2,080/yr)$32/hr ($4,160/yr)$33/hr ($6,240/yr)
$40/hr$41/hr ($2,080/yr)$42/hr ($4,160/yr)$43/hr ($6,240/yr)
Tip: Always calculate your raise on an annual basis to compare different types of raises. A $2/hour raise sounds small, but it equals $4,160 per year — more than a 5% raise on a $75,000 salary.

Is Your Raise Keeping Up with Inflation?

A raise that is lower than inflation means you are actually earning less in real terms. The US inflation rate in 2026 is approximately 2.5-3%. If your raise is less than 3%, your purchasing power has decreased.

Real raise = Nominal raise - Inflation rate

Example: If you got a 4% raise and inflation is 3%, your real raise is only 1%.

Frequently Asked Questions

How do I calculate a pay raise in Excel?

In Excel, if your current salary is in cell A1 and the raise percentage is in B1: New salary formula = A1*(1+B1/100). For the increase amount: =A1*B1/100.

How do I calculate a pay raise after taxes?

Calculate the pre-tax raise first, then multiply by (1 - your tax rate). If your combined tax rate is 25% and your raise is $5,000, your after-tax raise is $5,000 × 0.75 = $3,750.

What is a good pay raise in 2026?

In 2026, a good pay raise is 4-6% for most industries. Anything above inflation (2.5-3%) represents real income growth. Tech and healthcare workers may see 5-8% raises due to high demand.

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