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How to Calculate a Salary Increase

By · Updated July 30, 2026

To calculate a salary increase, multiply your current pay by the raise percentage divided by 100, then add the result to your current pay. A 4% raise on $55,000 is 55,000 × 0.04 = $2,200, giving a new salary of $57,200. The same three-step method covers percentage raises, fixed-dollar raises, and working backwards from a salary you want to reach.

The salary increase formula

There is only one formula to remember, and every other version of the question is a rearrangement of it:

New salary = Current salary × (1 + Raise % ÷ 100)

Dividing by 100 turns the percentage into a decimal multiplier: 4% becomes 0.04, 3.5% becomes 0.035, 12% becomes 0.12. Adding 1 to that multiplier is what keeps your existing salary in the result — multiply by 0.04 alone and you get only the increase, not the new total.

If you would rather see the increase on its own first:

Increase = Current salary × (Raise % ÷ 100)
New salary = Current salary + Increase

Both routes give the same answer. The second is easier to sanity-check, because the increase should look like a plausible fraction of your pay before you add it back.

The three ways a raise is usually described

1. A percentage increase

The most common form: “you’re getting a 4% raise.” Multiply and add.

On $55,000 at 4%: 55,000 × 0.04 = $2,200 increase, so the new salary is $57,200.

2. A fixed dollar amount

Sometimes the offer is a flat sum: “we’re adding $3,000.” No multiplication needed for the new salary — just add it. But you will usually want the percentage as well, because that is the number you can compare against inflation and against what colleagues or the market are getting.

Raise % = (Increase ÷ Current salary) × 100

A $3,000 increase on $55,000 is (3,000 ÷ 55,000) × 100 = 5.45%.

3. A target salary you want to reach

If you are preparing for a review and you know the number you want, work backwards to the percentage you need to ask for:

Raise % needed = ((Target salary ÷ Current salary) − 1) × 100

Going from $55,000 to $62,000: (62,000 ÷ 55,000) − 1 = 0.1273, so 12.73%. Naming a specific figure in the conversation is far stronger than asking for “more”, and this is how you arrive at one.

How to calculate a wage increase percentage between two salaries

This is the reverse calculation, and the one people most often get wrong. To find the percentage change between an old and a new figure:

Increase % = ((New pay − Old pay) ÷ Old pay) × 100

From $48,000 to $51,600: (51,600 − 48,000) ÷ 48,000 = 0.075, so a 7.5% increase.

The common mistake is dividing by the new figure instead of the old one. Percentage change is always measured against where you started. Dividing 3,600 by 51,600 gives 6.98%, which is not the raise you received — it is the proportion of your new salary that the increase represents. The two are different numbers and only the first one is the raise.

Worked example, start to finish

Take a salary of $62,400, paid every two weeks, with a 3.5% raise starting in January.

  1. Convert the percentage. 3.5 ÷ 100 = 0.035.
  2. Find the annual increase. 62,400 × 0.035 = $2,184.
  3. Add it back. 62,400 + 2,184 = $64,584 new annual salary.
  4. Convert to a paycheck. Paid every two weeks means 26 paychecks: 2,184 ÷ 26 = $84.00 more per paycheck, before deductions.
  5. Check it in real terms. If inflation over the same year was 3.5%, the raise held your purchasing power flat rather than improving it.

Turning a raise into a per-paycheck figure

The annual number is the one people quote, but the per-paycheck number is the one you actually feel. Divide the annual increase by how many times you are paid:

Being paid every two weeks and twice a month are not the same thing, and the difference catches people out. Twice-monthly means 24 larger paychecks on fixed dates; every two weeks means 26 slightly smaller ones on a rolling schedule. The annual total is identical either way.

Hourly workers: annualize first

A percentage raise applies to your hourly rate exactly as it would to a salary. On $22.00 an hour, a 4% raise adds 22.00 × 0.04 = $0.88, taking you to $22.88.

To see the annual effect, multiply the hourly increase by the hours you actually work:

Annual increase = Hourly increase × Hours per week × Weeks per year

At 40 hours across 52 weeks, $0.88 × 40 × 52 = $1,830.40 a year. At 25 hours a week the same raise is worth $1,144 — the hourly gain is identical, but there are fewer paid hours for it to apply to. Overtime, unpaid leave and variable schedules all shift the real total, so treat the full-time figure as a ceiling rather than a promise.

Check the raise against inflation

A raise only leaves you better off if it outpaces prices. Compare the two as a ratio, not by subtracting:

Real raise = (1 + raise %) ÷ (1 + inflation %) − 1

At low numbers, subtracting is close enough — a 4% raise against 3% inflation is roughly +1% either way. The gap widens as the figures grow, which is why the ratio is the version worth learning. If the result is negative, your pay rose while your purchasing power fell.

For the current benchmarks, see the average raise percentage and what a typical cost of living raise looks like.

A note on rounding

Payroll systems round to the cent, and small differences compound across a year. Calculate with the full figure and round only at the end. Rounding 3.5% to 4% before you start turns a $2,184 increase into $2,496 — a $312 error on a single salary, and enough to make you think you were shortchanged when you were not.

Common mistakes

Multiplying by the percentage instead of one plus the percentage. 62,400 × 0.035 is the increase, not the new salary. Adding the 1 is what keeps your existing pay in the result.

Dividing by the new salary when finding a percentage change. Always divide by the starting figure.

Expecting the full raise to appear in your take-home pay. The increase is added to gross pay and then taxed at your marginal rate, so the visible change on your payslip is a smaller percentage than the raise itself.

Assuming a mid-year raise pays the full annual amount this year. A raise starting in July only lands in the remaining paychecks. You get roughly half the annual figure in year one and the full amount every year after.

Common questions

How do I calculate a 3% raise?

Multiply your salary by 0.03 to get the increase, then add it. On $50,000 that is $1,500, giving $51,500. See the full breakdown on how much a 3% raise is worth.

What is the formula for calculating a pay increase?

New pay = current pay × (1 + raise ÷ 100). To find the increase on its own, multiply current pay by the raise divided by 100 without adding the 1.

How do I find the percentage between two salaries?

Subtract the old salary from the new one, divide by the old salary, then multiply by 100. Always divide by the starting figure, never the ending one.

What is the difference between a raise amount and a raise percentage?

The amount is the dollars added; the percentage is that amount expressed as a proportion of your current pay. The same $3,000 is a 6% raise on $50,000 and a 3% raise on $100,000, which is why percentages are used for comparison and dollars for budgeting.

How do I calculate a wage increase for an hourly job?

Apply the percentage to your hourly rate, then multiply the increase by your hours per week and weeks per year to get the annual effect. A 4% raise on $22.00 an hour is $0.88 more per hour, or $1,830.40 a year at 40 hours a week.

Try it with your own numbers

The calculators do every step above and show the per-paycheck and after-inflation figures at the same time:

Sources & methodology

Every formula on this page is standard arithmetic rather than a proprietary model, and the calculators use the same ones with no hidden adjustments. Pay-period counts follow US convention: 52 weekly, 26 biweekly, 24 semimonthly, 12 monthly. Full-time hourly conversions assume 40 hours a week across 52 weeks unless you change them. All figures are gross, before tax and deductions. See our methodology for the complete set of assumptions.