How to calculate a pay raise
A raise can be described three ways, and it helps to be able to move between them. The formulas are simple:
Raise % = (New salary − Current salary) ÷ Current salary × 100
Hourly rate = Annual salary ÷ (Hours per week × 52)
Example: you earn $65,000 and receive a 4% raise.
- Raise amount: $65,000 × 0.04 = $2,600 a year
- New salary: $65,000 + $2,600 = $67,600
- New hourly rate at 40 hours: $67,600 ÷ 2,080 = $32.50 (up from $31.25)
- Per bi-weekly paycheck: $2,600 ÷ 26 = $100 more before tax
Why your raise feels smaller in your paycheck
Every extra dollar of a raise is taxed at your marginal rate — the rate on your top slice of income — not your average rate. For most people that means federal tax of 12% or 22%, plus 7.65% Social Security and Medicare, plus state tax. So a $2,600 raise usually adds only about $1,800–$2,000 to your take-home pay.
For a single filer in Illinois earning $65,000, here is what raises of different sizes are really worth after tax:
| Raise | Gross increase | Take-home increase / yr | Per bi-weekly check |
|---|---|---|---|
| 3% | $1,950 | $1,425 | $54.82 |
| 5% | $3,250 | $2,276 | $87.52 |
| 10% | $6,500 | $4,401 | $169.27 |
Myth: "A raise can push me into a higher bracket and lower my take-home pay." It can't. Only the dollars above the bracket threshold are taxed at the higher rate, so a raise always increases your net pay. (The rare exceptions are income-tested benefits like Medicaid or ACA subsidies, not tax brackets.)
Is your raise beating inflation?
A raise only increases your buying power if it is larger than inflation. If prices rose 2.9% over the year and your pay went up 3%, your real raise is about 0.1% — essentially standing still. The calculator shows your real raise using the formula (1 + raise) ÷ (1 + inflation) − 1. Check the latest 12-month CPI figure from the Bureau of Labor Statistics and enter it for an up-to-date comparison.
What is a good raise in 2026?
Large employer surveys (such as WTW's and Mercer's annual salary budget reports) projected average US salary increase budgets of roughly 3.5% for 2026, with merit raises for top performers commonly in the 4%–6% range. As a rough guide:
- Below 3%: a cost-of-living adjustment; likely at or below inflation.
- 3%–5%: a standard merit increase.
- 5%–10%: strong performance or a market adjustment.
- 10%–20%+: typical of a promotion or a job change. Switching employers has historically produced larger pay jumps than staying put.
How to ask for a raise
- Know your market rate. Compare your salary with the BLS Occupational Employment and Wage Statistics for your job and metro area, plus salary data from job postings (many states now require pay ranges in job ads).
- Bring evidence. List measurable results from the last year — revenue, savings, projects shipped, responsibilities you took on.
- Ask for a specific number. Use this calculator to turn a percentage into a dollar figure and ask for that amount, slightly above your target.
- Time it well. The best moment is shortly before budgets are set — often one to three months before your annual review.
- Consider total compensation. If base salary is capped, negotiate a bonus, extra PTO, a higher 401(k) match or remote-work flexibility.
Frequently asked questions
How do I calculate my raise percentage?
Subtract your old pay from your new pay, divide by your old pay, and multiply by 100. For example, going from $60,000 to $64,000 is ($64,000 − $60,000) ÷ $60,000 × 100 = 6.67%.
How much is a 3% raise on $50,000?
$1,500 a year, for a new salary of $51,500. That is about $57.69 more per bi-weekly paycheck before tax, or roughly $42–$45 after tax for most people.
How much is a $1 an hour raise per year?
At 40 hours a week, a $1/hour raise equals $2,080 a year before tax ($1 × 40 × 52).
Is a 5% raise good?
Yes. A 5% raise is above the roughly 3.5% average salary increase budget employers reported for 2026 and comfortably ahead of recent inflation.
Will a raise put me in a higher tax bracket?
It may move part of your income into a higher bracket, but only the portion above the threshold is taxed at the higher rate. Your take-home pay still goes up.