How to use the salary increase calculator
Raise looks at a single pay rise.
- Enter your current salary, before tax.
- Enter the raise as a percentage, or switch to new salary and type the figure from your offer letter.
- Enter inflation over the same year. For a past raise, use the 12-month CPI change; for an upcoming one, your best estimate.
Over time projects a salary forward. Enter a starting salary, the yearly raise you expect, yearly inflation and the number of years. The chart compares your salary with the salary needed just to keep up with prices; the table shows each year in today’s money.
The formulas
Real raise = (1 + Raise %) ÷ (1 + Inflation) − 1Inflation is the rise in consumer prices over the same period, as a decimal. The real raise is the change in what your salary can buy.
In today's money = S × (1 + g)t ÷ (1 + i)tS is the starting salary, g the yearly raise and i yearly inflation. Salary needed to keep up = S × (1 + i)t.
A worked example
One raise. A 4% raise on $70,000 adds $2,800 a year, $233.33 a month before tax. Prices rose 3%, so keeping up would have taken $72,100. The real raise is +0.97%, worth $680 in today’s dollars.
Over time. Starting at $60,000 with 3.5% raises and 2.5% inflation, the salary reaches $84,636 after 10 years. In today’s money that is $66,117, a real gain of +10.20%, while the nominal figure rose +41.06%.
When a raise is really a pay cut
What matters is how the raise compares with inflation, not its size.
| Raise | Inflation | Real raise |
|---|---|---|
| 2% | 3% | -0.97% |
| 3% | 3% | 0.00% |
| 4% | 3% | +0.97% |
| 8% | 3% | +4.85% |
| 4% | 6% | -1.89% |
A raise that only matches inflation leaves you where you were. A 4% raise in a year of 6% inflation, like the 2021–2022 price spike in the US, is a real pay cut even though the paycheck is bigger.
Small gaps add up over a career
Raises that match inflation keep a salary flat in real terms indefinitely: at 2.5% raises and 2.5% inflation, the salary is worth $60,000 in today’s money after 10 years. Beating inflation by about one point a year, as in the example, adds +10.20% of buying power in ten years and +33.81% over 30 years. The same arithmetic works the other way: falling a point behind each year quietly erodes a salary that looks like it keeps rising.
What this calculator does not include
- Taxes. A raise is taxed at your marginal rate, so the take-home gain is smaller. The salary after tax calculator shows the effect.
- Your own inflation. CPI is an average basket; rent, childcare or healthcare may be rising faster for you.
- Bonuses, benefits and promotions. Only base salary is modeled, with the same raise every year.