The Complete Guide to Calculating a Pay Raise
By Arshi Khan, Founder of Just4Marketing · Last reviewed October 2026
A raise is usually announced as a percentage, but what matters is what it means for your paycheck — and whether it keeps up with rising prices. This guide shows how to turn a percentage or dollar raise into your new pay, how much more you'll take home each month and each paycheck, and how to work out your real raise after inflation.
A worked example
| Item | Result |
|---|---|
| Current salary | $60,000 |
| Raise | 4% |
| New salary | $62,400 |
| Extra per year | $2,400 |
| Extra per month | $200.00 |
| Extra per biweekly paycheck (26 a year) | $92.31 |
| Real raise with 3% inflation | 0.97% |
For hourly pay, the calculator converts to yearly pay using your hours per week × 52. A 4% raise from $25 to $26 an hour at 40 hours a week is worth $2,080 a year.
Why small differences add up
Raises compound: each one is a percentage of a salary that already includes the last. Starting at $60,000, raises of 4% a year take you to about $85,400 by year 10, while 3% a year reaches about $78,300. Over those ten years, the 4% path earns about $32,500 more in total.
Negotiating with the numbers
Start from inflation
A raise at or below inflation only keeps your pay's buying power the same.
Talk in yearly dollars too
'An extra $3,000 a year' is easier to compare with market pay than a percentage.
Count the whole package
Bonuses, retirement matching and extra paid time off can be worth as much as a larger base raise.
Frequently asked questions
How do I calculate a percentage raise?
New pay = current pay × (1 + raise ÷ 100). A 4% raise on a $60,000 salary is $60,000 × 1.04 = $62,400, an extra $2,400 a year or $200 a month before tax.
How do I work out what percentage raise I got?
Divide the new pay by the old pay and subtract 1. Going from $25.00 to $26.00 an hour is 26 ÷ 25 − 1 = 4%. Choose 'Dollar amount' in the calculator to enter a raise in dollars and see the percentage.
What is a real raise?
It's your raise after inflation: (1 + raise) ÷ (1 + inflation) − 1. A 4% raise with 3% inflation is a real raise of about 0.97%. A 2% raise with 3.5% inflation is a real pay cut of about 1.45%.
How much more will I take home?
The calculator shows the raise before tax. Your take-home increase will be smaller, depending on your tax rate and any deductions that rise with pay, such as retirement contributions.