A raise has two numbers and the letter only mentions one. The nominal figure is what you were offered. The real figure is what it does to your purchasing power, and this pay raise calculator shows both, because they can point in opposite directions.
What a raise looks like in your paycheck
Annual figures are hard to feel, so the calculator breaks the increase down to the rhythm you are actually paid in. A 4% raise on $65,000 is $67,600, which sounds substantial. Per paycheck it is $100 every two weeks, or $216.67 a month, before any tax comes out of it.
Neither number is the wrong one to look at. They just answer different questions, and seeing them together is usually more useful than either alone.
A 3% raise in a 4% year is a pay cut
Not a small raise. A cut, of roughly 1%, because prices moved further than your pay did. On $65,000 that 3% raise takes you to $66,950, which in the money you had last year is worth $64,375. You are $625 behind where you started.
Nothing on the pay stub says so, which is why raises that lose ground are so easy to accept. Enter the raise you were offered and the inflation over the same period, and the calculator gives you a one-line verdict rather than leaving you to work it out.
This is worth knowing before a review, not after. If prices have moved 3%, then 3% is the number that keeps you level, and anything below it is a request to accept less than you had. That is a reasonable thing to say out loud in the conversation.
Why it is not simply one minus the other
Subtracting inflation from the raise is close enough at small numbers and drifts as they grow. The real change is the raise divided by inflation, not minus it.
- 3% against 4% is -0.96%, where subtraction says -1.00%.
- 20% against 12% is 7.14%, where subtraction says 8%.
- 4% against 4% is exactly zero, which both methods agree on.
The gap is small on a modest raise and large on a big one, and getting it right costs the calculator a single division. This page does the division.
What the calculator will not tell you
Your own inflation is not the national figure. If most of your money goes on rent and groceries, and those moved more than the index did, then the index flatters your raise. Use a number that reflects what you actually spend on, not just the headline.
It also works in reverse. Enter a negative percentage for a pay cut or reduced hours, and the same arithmetic tells you how far back it puts you.
If the raise came alongside a bonus, the bonus tax calculator covers what will actually be withheld from that, and the salary to hourly calculator turns the new salary into what an hour of your time is now worth.
Pay raise calculator FAQ
Divide the increase by your current pay and multiply by 100. A $2,600 increase on $65,000 is a 4% raise. To go the other way, multiply your current pay by the percentage: 4% of $65,000 is $2,600, taking you to $67,600.
It depends entirely on inflation. If prices rose 2%, a 3% raise leaves you about 1% better off. If prices rose 4%, the same raise is a real-terms cut of about 1%, worth roughly $625 a year on a $65,000 salary.
$67,600 a year, an increase of $2,600. That works out at $216.67 a month, or $100 in every two-week paycheck before tax. Against 3% inflation it is a real increase of about 0.97%.
Divide your new pay by one plus the inflation rate. A $67,600 salary after 3% inflation is worth $65,631 in last year's money, so a 4% raise in a 3% year is a real gain of about $631 rather than the full $2,600.