To calculate a pay raise percentage, subtract old pay from new pay, divide the difference by old pay, and multiply by 100. Compare the same pay unit on both sides: hourly with hourly, or annual with annual. For an hourly raise, your hours and paid weeks determine the annual increase.
Three ways to describe the same raise
Suppose your annual gross salary is $50,000 and the new salary is $53,000. The increase is $3,000, which is 6% of the original salary. You can get the same answer from whichever figure you know:
- Percentage: $50,000 × (6 ÷ 100) = $3,000 increase; $50,000 + $3,000 = $53,000.
- Flat amount: $50,000 + $3,000 = $53,000; ($3,000 ÷ $50,000) × 100 = 6%.
- New pay: $53,000 − $50,000 = $3,000; divide that difference by the old pay to get 6%.
The percentage always uses the old pay as its denominator. Dividing by the new pay answers a different question. If old pay is zero, a percentage increase from that baseline is undefined; compare dollar amounts instead.
What an hourly raise means over a year
An increase from $25 to $26.50 per hour is $1.50 per hour, or 6%. At an assumed 40 hours each week for 52 paid weeks, that is $1.50 × 40 × 52 = $3,120 more gross pay in a year. Change the hours or paid weeks if your schedule differs. A change in hours can alter annual earnings even when the hourly rate stays the same.
A $1 or $2 hourly raise by week, month and year
At 40 hours per week and 52 paid weeks, a $1 raise adds $2,080 gross per year, or about $173.33 per month averaged over the year. A $2 raise doubles that increase to $4,160 per year, or about $346.67 per month.
| Hourly increase | Per paid week | Monthly average | Per year |
|---|---|---|---|
| +$1/hour | +$40.00 | +$173.33 | +$2,080.00 |
| +$2/hour | +$80.00 | +$346.67 | +$4,160.00 |
Annual increase = hourly increase × hours per week × paid weeks. Monthly average = annual increase ÷ 12. The table assumes the raise applies for the full year, with no change in hours.
Compare a shorter schedule or fewer paid weeks
| Work schedule | Per paid week | Monthly average | Per year |
|---|---|---|---|
| 20 hrs × 52 wks | +$20.00 | +$86.67 | +$1,040.00 |
| 40 hrs × 52 wks | +$40.00 | +$173.33 | +$2,080.00 |
| 40 hrs × 50 wks | +$40.00 | +$166.67 | +$2,000.00 |
At 20 hours per week, the $1 hourly increase adds half as much as it does at 40 hours. With 40 hours and 50 paid weeks, it adds $2,000 rather than $2,080. Use the paid hours you reasonably expect; paid vacation does not automatically mean an unpaid week.
A rate increase and a schedule change should be evaluated separately. Moving from $24/hour at 40 hours to $25/hour at 20 hours raises the rate, but weekly base pay falls from $960 to $500. The Pay Raise Calculator keeps one schedule for both rates; compare different schedules with the Annual Income Calculator.
What changes on your actual paycheck?
A $1 raise adds $80 gross to an 80-hour, two-week pay period. The annualized monthly average is not the amount added to each paycheck. Actual pay depends on paid hours, the effective date of the raise, payroll periods and deductions.
If the new rate applies for 26 paid weeks at 40 hours per week, a $1 raise adds $1,040 gross for that period. Do not use the full 52-week increase as this year's additional income when the raise starts midyear.
This guide uses USD examples. The arithmetic works in other currencies when all amounts use the same currency and pay unit. Tax and payroll rules depend on location. For U.S. federal withholding, the IRS Tax Withholding Estimator can help assess withholding separately; this guide does not estimate take-home pay.
Compare offers with the right context
- Check whether the figure is an hourly rate, annual salary or one paycheck.
- Use the same assumed hours and paid weeks on both sides of the comparison.
- Keep bonuses, benefits, overtime, taxes and deductions separate; this is a base gross-pay comparison, not take-home pay.
- A lower new rate is a pay reduction. Its percentage change is negative, using the old rate as the baseline.
Calculate your own figures
The Pay Raise Calculator accepts all three input methods and shows the dollar and percentage difference together. For a comparison between annual salary and hourly rates, use the salary versus hourly guide.
Before entering an offer, note the old and new pay units, expected paid hours and weeks, and whether bonus, overtime or benefits are quoted separately. For recurring overtime, use the Overtime Pay Calculator rather than treating its premium as a base-rate raise.
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