Pay Raise Calculator
A raise sounds great until inflation takes its cut. This calculator turns a raise percentage into your new salary, then shows what the increase is really worth once you account for rising prices — your true gain in buying power.
How this calculator works
Your new salary is a straightforward bump:
new salary = current × (1 + raise%)
But a 4% raise during 3% inflation isn’t a 4% gain in what your money buys. The real raise adjusts for inflation:
real raise = (1 + raise) ÷ (1 + inflation) − 1
If your raise merely matches inflation, your real raise is roughly zero — your pay went up, but your purchasing power stood still. If the raise is below inflation, you’ve effectively taken a pay cut in real terms, even though the number got bigger.
Why this matters at review time
“Cost-of-living adjustments” are designed to keep you even with inflation, not ahead of it. A true raise — more buying power, a promotion, more responsibility — needs to beat inflation. Knowing the real number helps you evaluate an offer honestly.
Frequently asked questions
- What's the difference between a nominal and a real raise?
- The nominal raise is the headline percentage (and dollar increase). The real raise subtracts inflation to show how much your actual buying power improved. A 3% raise in a 3% inflation year is a 0% real raise.
- Is a raise below inflation really a pay cut?
- In terms of buying power, yes. If prices rise faster than your pay, each dollar buys less, so your standard of living can slip even as your salary number rises. The calculator shows this as a negative real raise.
- How does this affect my take-home pay?
- Higher gross pay also means more tax — though thanks to progressive brackets, only the new income is taxed at higher rates, so a raise always increases take-home. Use the take-home pay calculator to see the net effect.