Pay Raise Calculator
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Whether you've recently been offered a pay raise or are just planning ahead, our pay raise calculator is here to help you understand how a pay increase might affect your earnings.
How to use the pay raise calculator
- Enter your current pay: Input your current pay rate, whether it's hourly, daily, monthly, or yearly.
- Input your number of hours: Enter the number of hours you work per week.
- Input the raise details: Enter the percentage or the specific amount of the raise.
- Calculate: Our calculator will compute the increase and show you your new pay figure.
What is a pay raise?
A pay raise refers to an increase in an employee's salary or wage. Pay raises are a common way for employers to recognize and reward an employee's hard work, loyalty, or increased skill level. They can be given in various forms, such as a percentage increase relative to the current salary, a flat rate increment, or performance-based bonuses.
While evaluating a pay raise, it's important to keep in mind that the boost in your salary could potentially move you into a higher tax bracket. This shift means that some or all of the extra income from your raise might be taxed at a higher rate, impacting the net benefit of the salary increase. 1
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What is a typical annual pay raise?
It's common for companies to offer employees an average increase of about 3-5% per year. 2 But, as with most things in life, it's not always so straightforward. A number of factors come into play, with the raise percentage being influenced not only by your performance and position but also by broader economic and organizational factors. 3 Let’s break these down:
- Inflation Rates: Pay raises often correlate with the cost of living adjustments based on inflation rates. During times of high inflation, your company may try to adjust your salary so you can keep up.
- Company Performance: The financial health and profitability of a company play a crucial role. If your company is doing well, there's a better chance of you seeing a higher raise. But if times are tough, the budget for raises might be tighter.
- Industry Standards: Different industries have varying standards for pay raises. For instance, high-growth sectors like technology may offer larger raises than more stable, established sectors.
- Employee Performance: Individual performance is a critical factor. If you're consistently exceeding expectations or have taken on additional responsibilities, you may be rewarded with a higher raise.
- Market Trends: Salary trends in the job market influence raise percentages. Companies will often adjust their raise structures to stay competitive and retain talent.
- Location: Geographic location and the cost of living in that area can impact raise percentages. If you're living in a pricier area, your company might be a bit more generous with their raise to help you handle the steeper living costs.
- Government Policies and Economic Conditions: Economic policy changes, tax laws, and the overall economic health of the country can influence how much your company might offer in terms of a raise.
How to calculate a percentage increase in salary
To calculate a percentage increase, multiply your current salary by the percentage of your raise. For example, a 5% raise on a $30,000 salary is an additional $1,500.
How much is a 5% pay raise?
To calculate a 5% pay raise:
- Step 1: Convert the raise percentage to a decimal. For 5%, this is 0.05 (5/100).
- Step 2: Multiply your current salary by 0.05. For instance, if your salary is $30,000, the calculation is $30,000 × 0.05 = $1,500.
- Step 3: Add this amount to your current salary. So, $30,000 + $1,500 = $31,500.
- Your new salary after a 5% raise would be $31,500.
What's the difference between a flat raise and a percentage raise?
The key difference between a flat raise and a percentage raise lies in how the increase is calculated and applied to your salary.
- Flat Raise: This is a fixed amount that is added to your salary. It’s the same for everyone, regardless of their current salary. For example, if your company decides to give a flat raise of $2,000, everyone gets an additional $2,000 to their annual salary, whether they were making $30,000 or $60,000.
- Percentage Raise: This type of raise is based on a percentage of your current salary. It's more individualized, as the actual increase in money varies depending on what you are currently earning. As an example, a 5% raise for someone earning $50,000 a year would be $2,500, whereas for someone earning $80,000, it would be $4,000.
In essence, a percentage raise takes into account the proportionality of your current earnings, while a flat raise is a straightforward, uniform addition to your salary.
Understanding overtime
In addition to your regular salary, overtime pay can significantly boost your earnings. You can use our overtime calculator to calculate and assess how much you're earning from any extra hours you're working.
How to ask for a raise
Asking for a raise is a standard and reasonable part of your career progression, and it's actually less daunting for your manager than you might think. Alison Green at The Cut advises that the best approach is to be mindful of your timing, ideally after notable successes or during positive performance reviews. She says that if a year has passed since your last salary review and you've consistently delivered high-quality work in that period, it makes perfect sense to initiate a conversation about reviewing your pay.
Alison also emphasizes that preparation is key. She advises gaining a solid understanding of the market rate for your role and familiarizing yourself with your company’s salary structure. This knowledge will significantly bolster your argument.
When you're in the meeting, Alison suggests keeping your request straightforward and to the point. Focus on how you've gone above and beyond, and the specific achievements you've racked up. Equally important, she notes, is being prepared for various outcomes. If you don't get an immediate 'yes', it's a good idea to inquire about what's needed for a potential raise down the line.
For a more in-depth guide on how to ask for a raise, including ideas for what to say and how to handle potential outcomes, you can read Alison Green's article here.
Calculator by Alastair Hazell.Calculator references
- Investopedia. How Getting a Raise Affects Your Taxes.
- Indeed. What Is Considered a Reasonable Raise Increase?.
- Investopedia. Average Raise Percentage: What Factors Affect Your Raise?.
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