The math, by hand
How to Calculate a Pay Raise
Every formula behind a pay raise, worked out with real numbers — percent to dollars, dollars to percent, hourly pay, and what actually shows up in your paycheck.
- Two formulas
- Worked examples
- No sign-up
- Free
Quick Pay Raise Check
For after-tax and inflation views, use the full pay raise calculator.
How to Calculate a Pay Raise, Step by Step
Most people learn how to calculate a pay raise the day an offer letter shows up with a percent on it and no dollar figure. The arithmetic only takes three steps.
- Turn the percent into a decimal. Divide by 100 — a 3.5% pay raise becomes 0.035.
- Multiply by your current pay. That decimal times your salary is the dollar size of the raise.
- Add the raise to your old salary. The sum is your new pay.
Worked example: you make $58,000 and you're offered a 3.5% pay raise. Step one: 3.5% → 0.035. Step two: 0.035 × $58,000 = $2,030. Step three: $58,000 + $2,030 = $60,030. That last number is your new salary — the whole pay raise calculation in three lines.
Going the other direction: dollars to percent
Sometimes HR gives you a flat dollar amount instead, and you have to work out what pay raise that amount actually represents.
- Subtract old pay from new pay. The difference is the raise in dollars.
- Divide the raise by the old salary. This gives you a decimal fraction.
- Multiply by 100. That converts the fraction into a percent.
Worked example: your salary goes from $62,500 to $65,000 — a raise of $2,500. Divide $2,500 by $62,500 and you get 0.04. Multiply by 100 and the pay raise is exactly 4%. Reversing the formula this way is the fastest way to check whether a raise quoted only in dollars is actually competitive.
The Two Pay Raise Formulas
Everything above reduces to two formulas. Keep them and you can work out a raise from either direction without a calculator app.
| You know | Formula |
|---|---|
| Current pay and raise % | New pay = current pay × (1 + raise % ÷ 100) |
| Current pay and new pay | Raise % = (new pay − old pay) ÷ old pay × 100 |
The hourly version of a pay raise
Hourly workers do this the same way, just per hour instead of per year. Multiply the raise per hour by your weekly hours, then by 52 weeks, to see the annual value of the pay raise.
Worked example: a $0.90-an-hour raise at 38 hours a week is $0.90 × 38 × 52 ≈ $1,778 a year — a raise that sounds small on a pay stub but adds up to real money annually.
What a pay raise looks like per paycheck
An annual figure hides how small a raise feels on any single paycheck. Divide the annual raise by your number of pay periods to see the truth: on a bi-weekly schedule (26 paychecks a year), a $2,030 pay raise is about $2,030 ÷ 26 ≈ $78 more per paycheck, before tax. Seeing the per-paycheck number is the single best way to set honest expectations for a raise before it arrives.
Common mistakes when you calculate a pay raise
The most common error is dividing the raise by the new salary instead of the old one — that always understates the raise percentage. Watch out too for lumping overtime or a bonus in with base pay; a raise applies to your base rate only, and mixing in extra pay inflates the percentage you calculate. Finally, remember that taxes take a marginal bite out of every pay raise — the gross number above isn't what lands in your bank account, and the pay raise calculator on the homepage estimates that after-tax figure for you.
Skip the Math
These formulas are useful to know, but you don't have to run them by hand every time:
- Pay Raise Calculator — do this exact math instantly, plus after-tax and inflation-adjusted views.
- Raise Percentage Calculator — convert a dollar raise to a percent (or back) in one field.
- Average Raise Percentage — check whether the raise you calculated is actually a good one.
How to Calculate a Pay Raise — FAQ
How do I calculate a 5% pay raise?
Multiply your salary by 0.05 and add the result to your current pay. On $40,000, a 5% pay raise is 0.05 × $40,000 = $2,000, so the new salary is $42,000.
How much is a $1-an-hour raise per year?
Multiply the hourly raise by your weekly hours, then by 52. At 40 hours a week, a $1-an-hour pay raise is $1 × 40 × 52 = $2,080 a year — one of the easiest raise calculations to do in your head.
How do I calculate a pay raise on an hourly wage?
Same formula as salary, applied to the hourly rate: new rate = old rate × (1 + raise % ÷ 100). Then multiply the new rate by hours per week and by 52 to see the annual value of the pay raise.
What is the formula for a pay raise?
New pay = current pay × (1 + raise % ÷ 100). If you know the dollar amount instead of the percent, use raise % = (new pay − old pay) ÷ old pay × 100 to calculate the pay raise the other way.
How do I figure out my pay raise after taxes?
Apply your marginal federal rate plus 7.65% FICA to the raise amount, since a pay raise is taxed at your top bracket, not your average rate. The homepage pay raise calculator runs this estimate automatically.
How do I calculate a retroactive pay raise?
Multiply the raise per pay period by the number of pay periods since the raise's effective date. If a $78 bi-weekly pay raise was effective four pay periods ago, the retroactive pay raise owed is 4 × $78 = $312, on top of your regular paycheck going forward.