How to Calculate a Pay Raise
New pay = Current pay × (1 + raise % ÷ 100)
Raise % = (New pay − Current pay) ÷ Current pay × 100
A raise from $20 to $21.50 an hour is a 7.5% raise. At 40 hours a week it adds $3,120 a year before tax and $2,506.92 after tax.
Pay Raise Percentage Table
| Raise on $60,000 | New salary | Extra gross / year | Extra take-home / year |
|---|---|---|---|
| 2% | $61,200 | $1,200 | $964.20 |
| 3% | $61,800 | $1,800 | $1,446.30 |
| 4% | $62,400 | $2,400 | $1,928.40 |
| 5% | $63,000 | $3,000 | $2,410.50 |
| 8% | $64,800 | $4,800 | $3,856.80 |
| 10% | $66,000 | $6,000 | $4,821 |
| 15% | $69,000 | $9,000 | $6,981.50 |
A raise smaller than inflation lowers real pay. The Bureau of Labor Statistics publishes the Consumer Price Index used to measure it.
Does a Raise Push You Into a Higher Tax Bracket
A raise can move the last dollars of income into a higher bracket, but only those dollars pay the higher rate. Take-home pay always rises with a raise. The Tax Bracket Calculator shows where the bracket lines fall.
Hourly Pay Raise Calculator
An hourly raise is worth the raise times the hours you work in a year: a $1 raise at 40 hours a week adds $2,080 a year before tax.
| Raise on $20 / hour | New rate | Extra gross / year | Extra take-home / year | Per biweekly paycheck |
|---|---|---|---|---|
| $0.50 | $20.50 | $1,040 | $835.64 | $32.14 |
| $1 | $21 | $2,080 | $1,671.28 | $64.28 |
| $1.50 | $21.50 | $3,120 | $2,506.92 | $96.42 |
| $2 | $22 | $4,160 | $3,342.56 | $128.56 |
| $3 | $23 | $6,240 | $5,013.84 | $192.84 |
Fewer hours make the same raise smaller. At 30 hours a week, a 5% raise on $20 adds $1,253.46 a year after tax. Single filer, no state income tax.
Pay Raise per Biweekly and Monthly Paycheck
A raise per paycheck is the extra yearly take-home divided by the paychecks in the year. Here is the 5% raise on $60,000:
| Take-home | Before | After | Difference |
|---|---|---|---|
| Per year | $50,390 | $52,800.50 | $2,410.50 |
| Per month | $4,199.17 | $4,400.04 | $200.87 |
| Per biweekly paycheck | $1,938.08 | $2,030.79 | $92.71 |
That is a single filer in Texas. In Illinois, with its 4.95% state income tax, the same raise adds $87 per biweekly paycheck, or $2,262 a year.
How to Find the Raise Percentage Between Two Salaries
To find the raise percentage, subtract the old pay from the new pay, divide by the old pay, and multiply by 100.
A move from $52,000 to $55,000 is $3,000 more: $3,000 ÷ $52,000 × 100 = 5.77%. An hourly change from $17.50 to $19 is 8.57%.
In the calculator, choose "Dollars" for the raise and type the difference; the result line shows the percentage.
Pay Raise Over Several Years
Raises compound: each year's raise is figured on pay that already includes the raises before it.
Pay after n years = Current pay × (1 + raise % ÷ 100)ⁿ
| Year, 3% a year from $60,000 | Salary | Total increase |
|---|---|---|
| Year 1 | $61,800 | $1,800 |
| Year 2 | $63,654 | $3,654 |
| Year 3 | $65,563.62 | $5,563.62 |
| Year 4 | $67,530.53 | $7,530.53 |
| Year 5 | $69,556.44 | $9,556.44 |
After 5 years the salary is $9,556.44 higher, against $9,000 if every raise were 3% of the starting pay.
Pay Raise vs a One Time Bonus
A raise repeats every year and builds the base for later raises, while a bonus is paid once.
A $3,000 raise on $60,000 adds $2,410.50 of take-home spread over the year's paychecks. A $3,000 bonus paid on its own is withheld at 22% federal plus FICA, leaving $2,110.50 on payday.
On the tax return both count as ordinary wages, so the final tax is the same; the bonus just has more taken out up front, and any excess comes back in the refund. The Bonus Tax Calculator shows the bonus side.
Pay Raise With Overtime
A raise for an hourly worker also lifts the overtime rate, because overtime is 1.5 times the regular rate.
A raise from $20 to $21 moves overtime from $30 to $31.50 an hour. With 5 overtime hours every week, the $1 raise adds $2,080 of regular pay and $390 of overtime pay a year before tax.
The pay raise calculator counts regular hours only; the Overtime Calculator adds the overtime hours.
Frequently Asked Questions
How is a pay raise calculated?
A pay raise is calculated by multiplying current pay by the raise percentage and adding it to current pay. A 4% raise on $50,000 is $2,000, for a new salary of $52,000.
How much of my raise will I keep after taxes?
You keep about 70% to 80% of a raise at middle incomes. A 5% raise on $60,000 keeps 80.3% for a single filer with no state income tax.
Can a raise lower my take-home pay?
No. A raise cannot lower take-home pay under federal income tax, because each bracket rate applies only to the dollars inside that bracket.
What is a 3% raise on $50,000?
A 3% raise on $50,000 is $1,500, for a new salary of $51,500. After tax it adds $1,205.25 a year, or $46.36 per biweekly paycheck, for a single filer with no state income tax.
How much is a $1 raise per year?
A $1 raise is worth $2,080 a year before tax at 40 hours a week. For a $20 worker it adds $1,671.28 of take-home a year.
How much is a 5% raise per paycheck?
On $60,000, a 5% raise adds $92.71 to each biweekly paycheck after tax for a single filer in a state with no income tax.
Does a raise increase overtime pay?
Yes. Overtime is 1.5 times the regular rate, so it rises with every raise. A $1 hourly raise adds $1.50 to each overtime hour.
Is a raise taxed at a higher rate than my old pay?
The raise is taxed at your top bracket rate, which can be higher than your average rate. That is why you keep a smaller share of the raise than of your pay as a whole.