Pay Raise Calculator

How to calculate your new salary after a raise

Whether you just got good news from your manager or you’re going into a negotiation, knowing the exact numbers matters. A raise sounds big in the meeting room. It looks different when you see what actually hits your bank account.

The core formula is simple:

These are gross figures. After taxes, your actual take-home increase will be lower. A 22% federal marginal rate on that $3,900 knocks it down to about $253/month in net take-home. Still real money, but worth knowing the actual number when you’re budgeting.

What counts as a good raise in 2024-2025?

Context matters enormously. A “good” raise is relative to three benchmarks: inflation, your market value, and your performance.

Inflation benchmark: If your raise matches inflation, you’ve maintained your purchasing power but gained nothing in real terms. With inflation running around 3% in 2024-2025, a 3% raise is essentially flat in real value.

Market benchmark: What are other people in your role, at your level, in your geography getting paid? Sites like Glassdoor, Levels.fyi, LinkedIn Salary, and Salary.com give you data points. If the market rate for your role has moved up 10% while you got 4%, you’re falling behind even if the raise feels good.

Performance benchmark: Most compensation frameworks tie above-average raises to above-average performance. If your company’s merit budget is 4% on average, a 6-7% raise signals strong performance recognition. A 3% raise for top-rated performance is a red flag worth addressing.

Real raise vs. nominal raise: inflation adjustment matters

A nominal raise is the headline number your employer tells you. A real raise is what that increase is actually worth after inflation eats into its purchasing power.

This is why raises that only match inflation feel disappointing in practice. You earn more dollars, but each dollar buys slightly less. Your lifestyle stays the same at best. To actually improve your standard of living, your raise needs to exceed inflation.

The years from 2021-2023 made this painfully obvious. Workers who received 3-4% raises while inflation ran at 7-8% saw their real wages decline. The workers who fared better either had enough bargaining power to negotiate above-inflation increases, or switched jobs, where the typical salary bump is 10-20%.

Job switching still outperforms staying put for most salary growth. Employees who change jobs earn an average of 10-20% more than those who stay and wait for merit raises.

How a raise affects your benefits and 401(k)

Getting a raise doesn’t just change your take-home pay. Several parts of your compensation package are tied to your base salary, and a raise cascades through all of them.

401(k) contributions: If you contribute a percentage of salary (say, 6%), your dollar contribution automatically increases with your raise. If you were contributing $3,900/year on a $65,000 salary at 6%, you’d contribute $4,134/year on $68,900. The same percentage, more dollars. Employer matches set as a percentage of salary also increase.

Life insurance: Many employer-provided life insurance policies are based on a multiple of your annual salary (e.g., 2x salary). A higher salary means higher coverage, usually at no additional cost to you.

Short-term and long-term disability: These benefits are typically a percentage of your salary (often 60-70%). A higher base salary means larger disability payments if you ever need them.

Bonus targets: Many bonus structures are a percentage of base salary. A 10% bonus on $65,000 is $6,500. The same 10% on $68,900 is $6,890.

Social Security benefits: Higher lifetime earnings mean higher future Social Security benefits, since the formula is based on your 35 highest-earning years. The effect of one year’s raise on retirement benefits is small but compounds over a career.

What doesn’t automatically change: health insurance premiums, HSA contribution limits, or commuter benefits — those are set independently of your salary.

How to negotiate a raise effectively

Knowing your number is only the start. How you ask for it matters as much as what you ask for.

Do your homework first. Look up salary data for your title, experience level, and location. Use multiple sources: Glassdoor, LinkedIn Salary, Levels.fyi (for tech), Bureau of Labor Statistics Occupational Employment Statistics, and industry-specific surveys. Knowing the range gives you a principled anchor for the conversation.

Quantify your contributions. “I’ve been working really hard” doesn’t move anyone. “I led the initiative that reduced customer churn by 12%, which the team estimated saved $340,000 in annual revenue” does. Go through the past year and find measurable wins. Revenue generated, costs reduced, projects delivered, team members hired or mentored, systems improved.

Ask for a specific number, not a range. Saying “I’m looking for something between $5,000 and $8,000” invites the other party to anchor on the lower end. Say: “Based on market data and my contributions this year, I’m asking for $8,000.” You can negotiate down from there; you can’t negotiate up from a range they’ve already mentally accepted.

Timing matters. The best times to ask: right after a significant achievement, during your annual review cycle, after taking on materially more responsibility, or when you have a competing offer. The worst time: when the company just went through layoffs, missed earnings, or your manager just got some bad news.

Get it in writing. Any agreement should be documented in an offer letter, formal salary adjustment notice, or at minimum an email confirmation.

Using the 5-year projection to plan ahead

The chart in this calculator shows your salary trajectory over 5 years assuming your raise stays as a one-time adjustment (no further compounding). That flat projection is useful as a conservative baseline.

In reality, if your company gives regular annual merit increases, your salary compounds. A $65,000 salary growing at 4% per year becomes:

That’s a $14,083 increase over 5 years from consistent 4% raises — without any promotions or job switches. Compound growth in salaries works the same way as compound growth in investments: starting from a higher base means every future raise is also larger in dollar terms.

If you’re evaluating a job offer that pays $5,000 more but has a lower raise trajectory, the 5-year view often makes the choice clearer. A $70,000 offer with 4% annual raises reaches $85,166 in year 5. A $75,000 offer with 2% raises reaches $82,888. The higher starting salary wins short-term, but the higher growth rate wins long-term.

How to negotiate a pay raise effectively

Knowing what you should earn is the starting point. Getting there requires a different set of skills. Most people leave significant money on the table not because their performance doesn’t justify a raise, but because they approach the conversation without preparation.

Start with market data, not personal need. The strongest raise requests are anchored to what the role pays in your market, not to your expenses or cost of living. Use salary databases like Bureau of Labor Statistics Occupational Employment data, LinkedIn Salary, Glassdoor, or Levels.fyi for tech roles. Walk in knowing the 25th, 50th, and 75th percentile for your title in your metro area.

Time the conversation strategically. The best moments to ask: right after a visible win, during a scheduled performance review cycle, or when you’ve just taken on meaningful new responsibilities. Avoid asking during high-stress periods for your manager or company, after a missed target, or out of the blue with no context.

Quantify your contributions. Vague claims of hard work don’t move the needle. Specific numbers do. “I reduced the customer onboarding time by 3 days, which freed up 12 hours per week of support time” is a fundamentally different argument than “I’ve been working really hard.” Go through your last 6-12 months and write down every measurable impact.

Name a specific number, not a range. Negotiation research consistently shows that giving a specific number (e.g., $87,000) anchors the discussion more favorably than giving a range ($83,000-$90,000). When you give a range, the other side hears the lower number as your actual target.

Have a fallback plan. If the company can’t meet your number, ask what it would take to get there and put it in writing. A specific timeline and performance target is better than a vague “we’ll revisit it.” If the base salary is fixed, negotiate non-cash compensation: extra PTO, flexible hours, remote work, professional development budget, earlier review cycle.

Cost-of-living raises vs. merit raises

Not all raises are equal. Understanding the difference helps you interpret what your employer is actually offering.

A cost-of-living adjustment (COLA) keeps your purchasing power the same as prices rise. If inflation runs 4% and you receive a 4% raise, your real wage is unchanged. You’re not getting ahead; you’re staying even. Many companies announce “raises” that are entirely or largely COLA, framed as generosity.

A merit raise increases your real wage above inflation. A 7% raise in a 4% inflation environment gives you a 2.9% real increase in purchasing power. That’s genuine income growth.

The Pay Raise Calculator’s inflation-adjusted mode shows you both numbers: the nominal raise percentage and the real raise after stripping out inflation. Use it to evaluate any raise offer in real terms, not just nominal ones.

Questions to ask when evaluating a raise offer:

• What is the current inflation rate, and how does this raise compare?
• Is this the same raise everyone received (COLA) or specific to my performance?
• What is the company’s raise budget, and where does this put me relative to peers?
• Is there a path to higher raises tied to specific outcomes I can work toward?