How a pay raise is calculated
A raise expressed as a percentage is applied to your current salary:
New salary = Current × (1 + raise% ÷ 100)
So a 5% raise on $50,000 adds $2,500, bringing you to $52,500. To find the percentage between two salaries, use (new − current) ÷ current × 100.
Is your raise keeping up with inflation?
A raise only increases your buying power if it beats inflation. If prices rose 4% over the year and your raise is 3%, you've effectively taken a small pay cut in real terms. When negotiating, it's worth knowing the recent inflation rate so you can aim above it.
Before you accept
- Remember the figures here are gross — tax will reduce your take-home increase.
- Consider the whole package: bonus, pension, extra holiday, and flexibility all have value.
- A modest percentage compounds over a career — small raises early add up significantly.