Explain it like I’m 5
A raise is when your boss starts paying you more. People usually talk about raises in percent. “Percent” means “out of 100.” A 5% raise means: for every $100 you used to earn, you now earn $105.
So if you earned $50,000 a year, a 5% raise adds $2,500 (that’s 5 × $500), and you now earn $52,500.
But there’s a catch called inflation: things in shops get a little more expensive every year. If your pay goes up 5% but prices go up 3%, you can really only buy about 2% more stuff than before. The calculator shows you both numbers.
Words you’ll see, in plain English
- Raise
- An increase in your pay, usually shown as a percentage. A 5% raise on $50,000 adds $2,500 a year.
- Gross pay
- Your pay before anything is taken out — before taxes, insurance or retirement savings. What lands in your bank account (net pay) is smaller.
- Inflation
- Prices slowly going up over time, so the same dollar buys a little less each year. A candy bar that cost $1 might cost $1.03 next year.
- Cost-of-living adjustment (COLA)
- A raise meant only to keep up with rising prices, so your pay buys the same amount as last year.
- Real return
- How much your money grows after you take away inflation. If your money grows 7% but prices grow 3%, you are really about 4% richer.
More money words explained simply in our glossary.
How to use the raise calculator
- Choose how you’re paid and enter your current pay before tax.
- Enter what you know about the raise: the percentage, the dollar amount, or your new pay. If you pick “my new pay”, the calculator works out the percentage for you.
- Check your hours per week so hourly and yearly pay convert correctly.
- Add inflation (optional) to see your raise in real buying power.
The formulas
New pay = old pay × (1 + raise % ÷ 100)
Raise % = (new pay − old pay) ÷ old pay × 100
Real raise ≈ (1 + raise) ÷ (1 + inflation) − 1
Converting between pay periods (assuming 40 hours a week and 52 weeks a year):
- Hourly → yearly: hourly × 40 × 52 = hourly × 2,080. So $25/hour ≈ $52,000/year.
- Yearly → monthly: divide by 12. Yearly → every two weeks: divide by 26.
Raise table: what common raises are worth
| Salary | 3% raise | 5% raise | 10% raise |
|---|---|---|---|
| $40,000 | $41,200 (+$100/mo) | $42,000 (+$167/mo) | $44,000 (+$333/mo) |
| $50,000 | $51,500 (+$125/mo) | $52,500 (+$208/mo) | $55,000 (+$417/mo) |
| $60,000 | $61,800 (+$150/mo) | $63,000 (+$250/mo) | $66,000 (+$500/mo) |
| $75,000 | $77,250 (+$188/mo) | $78,750 (+$313/mo) | $82,500 (+$625/mo) |
| $100,000 | $103,000 (+$250/mo) | $105,000 (+$417/mo) | $110,000 (+$833/mo) |
Tips for asking for a raise
- Know your number in dollars and percent. “$4,000” and “6.5%” sound different — use whichever is more persuasive, and know both.
- Compare against inflation. If prices rose 3% and your raise is 2%, your real pay went down. That’s a fair point to raise.
- Check market pay for your role and location. Job postings in many states now include pay ranges.
- Think in total pay: bonuses, retirement matching and benefits are part of the deal too.
Common mistakes
- Forgetting tax. A $3,000 raise doesn’t mean $3,000 more in your bank account — tax and deductions come out first.
- Believing a raise can lower your take-home pay. Moving into a higher bracket only taxes the extra dollars at the higher rate.
- Mixing up percent and percentage points. Going from a 3% raise to a 5% raise is 2 percentage points more.
Learn more
- Cost of Living Raises (COLA), Explained — A cost-of-living raise (COLA) increases your pay to keep up with rising prices. If prices rise 3% and your pay rises 3%, you’re not really better off — you’re just not falling behind. Here’s how to tell a real raise from a COLA.
- How to Ask for a Raise (and Actually Get It) — Asking for a raise feels scary, but it’s a normal business conversation. Here’s how to pick the right time, decide on a number, build your case, and what to say — with example scripts.
Frequently asked questions
How do I calculate a raise percentage?
Subtract your old pay from your new pay, divide by your old pay, and multiply by 100. Going from $50,000 to $53,000: ($53,000 − $50,000) ÷ $50,000 = 0.06, so a 6% raise. For hourly pay it works the same way: $20 → $21 is $1 ÷ $20 = 5%.
How do I calculate my new salary after a raise?
Multiply your current pay by 1 plus the raise as a decimal. A 4% raise on $65,000 is $65,000 × 1.04 = $67,600.
What is a good raise percentage?
Typical yearly raises in the US have been around 3% to 4% in recent years. A raise below inflation means your pay buys less than before, even though the number went up. Promotions and job changes often come with bigger raises, commonly 10% or more.
How much is a 3% raise on $20 an hour?
$20 × 0.03 = $0.60, so your new rate is $20.60 an hour. At 40 hours a week that’s $24.00 more a week and $1,248 more a year before tax.
How much more will I take home after a raise?
Less than the raise itself, because taxes come out of the extra money too. Only the extra dollars are taxed at your top rate — getting a raise can never make your total take-home pay go down because of a higher tax bracket.
What is a real raise?
Your raise after taking inflation into account. If you get a 5% raise but prices went up 3%, your real raise is about 1.9% — that’s how much more you can actually buy. The formula is (1 + raise) ÷ (1 + inflation) − 1.
These results are estimates for education only, based on the assumptions you enter. They are not financial, investment or tax advice. Real returns, rates and taxes vary. See our methodology anddisclaimer.