How to calculate a pay raise
A pay raise can be expressed as a percentage, a target salary, or a fixed amount. These formulas show how to calculate the new pay, the increase, and the salary increase percentage in each situation.
How to calculate a percentage pay raise
New pay = Current pay × (1 + Raise percentage ÷ 100)First convert the percentage to a decimal. A 5% raise becomes 0.05. Multiply current pay by 1.05 to get the new pay.
Example: 5% raise on a $50,000 salary
The annual increase is $2,500.00, and the new annual salary is $52,500.00. That is approximately $208.33 more per month before taxes and deductions.
How to calculate salary increase percentage
Raise percentage = (New pay − Current pay) ÷ Current pay × 100Subtract the old salary from the new salary, divide the difference by the old salary, and multiply by 100.
Example: moving from $62,000 to $68,000
The salary increase is $6,000.00. Dividing that increase by $62,000 gives a required raise of 9.68%.
How to calculate a fixed raise amount
New pay = Current pay + Raise amountKeep both amounts in the same pay period. Add an annual raise amount to annual pay, a monthly amount to monthly pay, or an hourly amount to hourly pay. SalaryKit then converts the result into every other supported period.
How to calculate an hourly wage increase
For an hourly worker, add the hourly raise to the current hourly wage, then multiply the increase by hours per week and weeks per year to estimate the annual impact.
Example: $1.50 raise on $22 per hour
The new hourly wage is $23.50. With 40 hours per week and 52 weeks per year, the raise adds $3,120.00 per year and equals a 6.82% pay increase.
Common pay raise calculation mistakes
- Mixing pay periods, such as comparing monthly current pay with an annual target salary.
- Treating 5% as the number 5 instead of the decimal 0.05 inside a manual formula.
- Assuming every hourly worker works 40 hours for all 52 weeks.
- Confusing gross pay with take-home pay after taxes and deductions.
- Comparing a biweekly paycheck with a twice-monthly paycheck; 26 and 24 pay periods are not the same.