How to Calculate Pay Increase

Calculating a pay increase takes less than a minute once you know two formulas. To find your new salary, add your raise amount to your current pay. To find your raise percentage, divide the raise amount by your old salary and multiply by 100.

Key Takeaways

• New salary = old salary + raise amount; raise % = (raise ÷ old salary) × 100.
• The average U.S. salary increase budget in 2025 was 3.9% (WorldatWork, 2024).
• Adjust for inflation to find your real (purchasing-power) pay gain.
• Merit raises, cost-of-living adjustments, and promotions all use the same core formula.

The Two Core Pay Increase Formulas

Every pay raise calculation starts with one of two questions: "What is my new salary?" or "What percentage raise did I get?" Here are both formulas side by side.

Formula 1 — New Salary After a Raise

New Salary = Old Salary + Raise Amount

Example: You earn $55,000 and receive a $2,750 raise.

$55,000 + $2,750 = $57,750

Your new annual salary is $57,750.

Formula 2 — Raise Percentage From Dollar Amount

Raise % = (Raise Amount ÷ Old Salary) × 100

Example: Same raise of $2,750 on a $55,000 salary.

($2,750 ÷ $55,000) × 100 = 5%

That dollar raise represents a 5% pay increase.

Step-by-Step: How to Calculate Any Pay Increase

Follow these four steps for any raise scenario — annual review, promotion, or negotiated offer.

Step 1 — Write Down Your Current Salary

Use your gross annual salary (before taxes). If you're paid hourly, multiply your hourly rate by your annual hours (e.g., $25/hr × 2,080 hrs = $52,000/yr).

Step 2 — Identify the Raise Amount or Percentage

Your employer may give you either: - A dollar amount ("You're getting a $3,000 raise"), or - A percentage ("You're receiving a 4% increase").

If you have the percentage and need the dollar amount, use:

Raise Amount = Old Salary × (Raise % ÷ 100)

Example: 4% raise on $65,000 = $65,000 × 0.04 = $2,600 raise.

Step 3 — Calculate Your New Salary

Add the raise amount to your current salary:

New Salary = $65,000 + $2,600 = $67,600

Step 4 — Verify With the Percentage Formula

Double-check: ($2,600 ÷ $65,000) × 100 = 4% ✓

Pay Increase Examples by Scenario

How to Calculate a Pay Increase Against Inflation

A nominal raise can actually shrink your purchasing power if inflation rises faster than your salary. WorldatWork's 2024 Salary Budget Survey found the median projected salary increase for 2025 was 3.9% — barely ahead of recent inflation rates. To find your real pay increase:

Real Raise % = Nominal Raise % − Inflation Rate %

Example: You got a 4% raise, but annual inflation ran at 3.2%.

Real raise = 4% − 3.2% = 0.8%

Your purchasing power grew by just 0.8% — even though your paycheck shows more dollars. If your raise equals the inflation rate, your real wage gain is zero. If it's below inflation, you took a real pay cut.

Worth knowing: When negotiating a raise, ask your employer for their projected inflation figure alongside the salary budget number. A 4% raise in a 4.5% inflation environment is effectively a pay cut — framing your ask around real wage preservation is a stronger negotiating position than citing a raw percentage alone.

How to Calculate a Pay Increase for Hourly Workers

If you're paid hourly, convert to annual or calculate directly per hour.

Hourly raise formula: ``` New Hourly Rate = Old Rate + Raise Amount per Hour Hourly Raise % = (Raise per Hour ÷ Old Rate) × 100 ```

Example: $22/hr → $23.50/hr raise.

Raise amount = $23.50 − $22.00 = $1.50/hr
Raise % = ($1.50 ÷ $22.00) × 100 = 6.8%

Annual impact of that hourly raise (2,080 working hours):

$1.50 × 2,080 = $3,120 more per year

What Counts as a Good Pay Increase?

Context matters. According to WorldatWork's 2024 Salary Budget Survey (covering over 2,400 U.S. organizations), the average salary increase budget was 3.9% for 2025. PayScale's 2024 Compensation Best Practices Report found that 71% of organizations planned to give raises in 2024, with merit increases averaging 4–5%.

As a general benchmark:

For a deeper breakdown, see what is a good raise percentage.

How to Calculate a Pay Increase When Switching Jobs

A job change often yields a larger salary jump than an internal raise. To calculate your pay increase from one job to another, use the same percentage formula:

Pay Increase % = ((New Job Salary − Current Salary) ÷ Current Salary) × 100

Example: Moving from $72,000 to $85,000.

($85,000 − $72,000) ÷ $72,000 × 100 = 18.1% increase

Factor in total compensation — benefits, bonus, 401(k) match, and equity — before comparing offers. A 10% higher base with no health benefits may net out lower than your current package.

How to Use a Raise Calculator

Manual math is straightforward, but a raise calculator lets you explore scenarios instantly. Use the Raise Calculator to:

• Enter your current salary and any raise percentage to see your new pay
• Work backwards from a target salary to find the raise amount you need
• Compare multiple raise scenarios side by side
• See monthly and biweekly pay breakdowns alongside annual figures

Frequently Asked Questions

How do I calculate a 3% pay increase?

Multiply your current salary by 0.03 to find the raise amount, then add it to your salary. For example, a 3% raise on $60,000 = $60,000 × 0.03 = $1,800 raise, giving a new salary of $61,800. According to WorldatWork (2024), a 3% raise is slightly below the U.S. average salary increase budget of 3.9% projected for 2025.

How do I calculate a pay increase percentage from old and new salary?

Subtract your old salary from your new salary, divide by the old salary, and multiply by 100. Formula: ((New − Old) ÷ Old) × 100. If you moved from $58,000 to $62,000, that's ($4,000 ÷ $58,000) × 100 = 6.9% raise. For more examples, see how to calculate a raise from old and new salary.

What is the formula for a salary increase percentage?

The salary increase percentage formula is: Raise % = (Raise Amount ÷ Old Salary) × 100. This tells you what fraction of your original pay the raise represents. A $3,500 raise on a $70,000 salary equals a 5% increase. See salary increase percentage formula for the full breakdown.

How do I calculate my biweekly pay after a raise?

Divide your new annual salary by 26 (the number of biweekly pay periods). Example: $67,600 ÷ 26 = $2,600 per paycheck. For a complete breakdown, see biweekly pay after raise.

Is a 5% raise good in 2025?

A 5% raise is above the U.S. average projected salary increase of 3.9% for 2025 (WorldatWork, 2024) and comfortably above a typical CPI inflation rate. Whether it's "good" depends on your role, location, and performance — but relative to the market, 5% outpaces the median merit increase. See is a 5 percent raise good for context by industry.

Conclusion

Calculating a pay increase comes down to two formulas: add the raise to your salary for the new total, or divide the raise by your old salary and multiply by 100 to get the percentage. The harder part is knowing whether that number is fair — compare your raise against the 3.9% U.S. average and your local inflation rate to understand its real value.

Use the Raise Calculator to run your own numbers in seconds, or explore how to ask for a raise for proven strategies to make the most of your next review.

Sources

• WorldatWork, 2024 Salary Budget Survey, retrieved 2026-06-15, https://worldatwork.org/resources/research
• PayScale, 2024 Compensation Best Practices Report, retrieved 2026-06-15, https://www.payscale.com/research-and-insights/cbpr/
• U.S. Bureau of Labor Statistics, Employment Cost Index, retrieved 2026-06-15