Pay Raise Calculator with Real Value After Inflation

How to do it

1. 1
   Choose how you describe the raise

   Pick a percentage raise or a new pay amount.

2. 2
   Enter your current pay

   Use yearly salary or an hourly rate, and the hours per week for hourly pay.

3. 3
   Enter the raise

   Type the percentage or the new pay.

4. 4
   Add tax and inflation

   Enter your marginal tax rate and the inflation rate you want to compare with.

5. 5
   Read the gain

   See the yearly, monthly and weekly difference, the after-tax gain and the real raise.

About this tool

A raise of 4 percent sounds good until the price of everything rises 3 percent. This calculator turns a raise into numbers you can plan with. Enter your current pay and either the percentage raise or the new pay, in yearly or hourly terms, and you get the yearly, monthly and weekly difference, the new hourly rate, the approximate after-tax gain, and the real raise once inflation is taken out. It works for salaried and hourly employees and for negotiating an offer.

Who this is for Employees preparing for a review, job seekers comparing offers, and managers working out what a budgeted raise means for each person. It also helps to answer the question whether a raise really improves your standard of living.

What it computes For a percentage raise the new pay is the old pay multiplied by one plus the percentage. For a new pay figure the percentage is the new pay divided by the old pay minus one. If you work by the hour, the yearly figure is the hourly rate times the hours per week times 52. The tool shows the difference per year, per month and per week and the hourly rate that results from a yearly salary.

After-tax gain A raise is taxed at your marginal rate, so the extra pay you take home is smaller than the headline. The tool applies the marginal rate you enter to the yearly difference and shows the monthly after-tax gain. Use your combined federal, state and payroll tax rate for a more realistic figure.

The real raise The real raise compares the new pay with the old pay after dividing by one plus the inflation rate. If it is negative you are losing buying power, even though the pay went up. The tool marks that case clearly and uses the inflation percentage you enter, which you can take from the latest consumer price index.

Worked example A salary of $62,000 and a 4 percent raise gives $64,480, a gain of $2,480 a year, $206.67 a month and $47.69 a week. At a 24 percent marginal rate the after-tax gain is about $157 a month. With inflation at 3 percent the real raise is about 0.97 percent, so the raise only slightly improves buying power.

Tips When you negotiate, compare the total package, since bonuses, benefits and paid leave matter. Run the tool with the raise that you ask for and with the one you expect. This tool is an arithmetic calculator and does not predict inflation or taxes.

Worked example

A $62,000 salary with a 4 percent raise becomes $64,480, a gain of $2,480 a year, $206.67 a month and, after 3 percent inflation, a real raise of about 0.97 percent.