How to use this calculator
- Enter your Current yearly pay before tax.
- Type the Raise as a percentage; use a negative value to model a pay cut.
- Enter the expected Inflation rate for the year.
- Read the New yearly pay, the monthly increase and the Real raise after inflation.
How a raise is calculated
A percentage raise multiplies your current pay by one plus the rate. A 5% raise on $60,000 is $60,000 × 1.05. The real raise corrects that for rising prices by dividing the two growth factors, rather than just subtracting inflation from the raise.
Real raise = (1 + raise) ÷ (1 + inflation) − 1- New pay = current pay × (1 + raise)
- raise and inflation are written as decimals (5% = 0.05)
- A real raise above 0 means your purchasing power grew; below 0 means it shrank
The difference is small for low rates but grows when inflation is high, so the calculator uses the exact division.
Example: 5% on $60,000
With a 5% raise and 3% inflation, new pay is $63,000. That is $3,000 more per year, or $250 a month before tax, and a new monthly gross of $5,250.
After inflation, the real raise is 1.94%, not 2%. You need a raise of at least 3% just to stand still.
When a raise is not really a raise
Take a 2% raise on the same salary. New pay is $61,200, up $100 a month, but with 3% inflation the real raise is −0.97%: you are slightly poorer in what your pay can buy. A 10% raise, by contrast, gives $66,000, $500 more per month and a real raise of 6.80%.
Inflation is personal. Rent, groceries and fuel may rise faster or slower than the headline figure, so try a few inflation rates. The inflation calculator shows what past price changes did to a dollar.
Using the result in a negotiation or decision
Express your ask in dollars and in real terms. If the offer is below inflation, you can say honestly that it is a pay cut in purchasing power. When comparing job offers, consider bonuses, retirement matching, health costs and commuting, not only the headline number.
Turn the monthly increase into a plan: send part of it to savings with the savings goal calculator before lifestyle spending absorbs it. For hourly workers, the hourly to salary calculator translates the rate to yearly pay.
Assumptions and limits
Figures are pre-tax. A raise can push part of your income into a higher tax bracket, and benefits tied to income may change, so take-home pay rises by less than the gross figure. The calculator also assumes a single raise over one year and a flat inflation rate; it does not model repeated raises or promotions.
Check your payslip or ask payroll for the exact net effect.
Frequently asked questions
How do I calculate a percentage raise?
Multiply your salary by the raise percentage divided by 100, then add the result to your salary. For a 5% raise on $60,000, that is $3,000, giving $63,000.
What is a real raise?
It is your raise adjusted for inflation. It shows whether your pay buys more or less than before.
Is a 3% raise good?
It depends on inflation and your market. A 3% raise with 3% inflation keeps your purchasing power flat, so a raise above inflation is the minimum for real progress.
Is the new pay before or after tax?
Before tax. The calculator works with gross pay, so your take-home increase will be smaller.
Can I use it for an hourly wage?
Yes. The percentage works the same on any pay figure, but enter yearly pay if you want a yearly answer.