How to calculate a pay raise
A raise is given in one of three ways: a percent of your pay, a dollar amount, or a new rate. Each one comes down to the same thing, your new pay.
New pay = current pay × (1 + raise percent ÷ 100)
New pay = current pay + raise amount
To compare pay across periods, the calculator turns everything into a yearly figure first. An hourly rate is multiplied by hours a week and paid weeks a year (40 × 52 = 2,080 hours by default), a weekly figure by 52, every two weeks by 26, twice a month by 24 and monthly by 12. Each period is then the yearly figure divided back out, rounded to the cent only at the end.
Example: $50,000 a year with a 5% raise is $50,000 × 1.05 = $52,500. That is $2,500 more a year, $208.33 more a month and $96.15 more every two weeks.
Find the percentage of a raise
If you already know your new pay, the percent is the difference divided by the old pay.
Raise percent = (new pay − old pay) ÷ old pay × 100
Going from $48,000 to $52,000 is $4,000 ÷ $48,000 × 100 = 8.33%. Going from $18.00 to $19.50 an hour is $1.50 ÷ $18.00 × 100 = 8.33% too. Choose "New pay" above to do this with any pay period.
Raises do not add up across years in a straight line. Two 5% raises in a row are 1.05 × 1.05 = 1.1025, a 10.25% raise in total, because the second 5% is taken on the already raised pay.
Common raises at a glance
| Raise | $20.00 an hour becomes | $50,000 a year becomes | More a month on $50,000 |
|---|---|---|---|
| 2% | $20.40 | $51,000.00 | $83.33 |
| 3% | $20.60 | $51,500.00 | $125.00 |
| 4% | $20.80 | $52,000.00 | $166.67 |
| 5% | $21.00 | $52,500.00 | $208.33 |
| 10% | $22.00 | $55,000.00 | $416.67 |
Back pay for a backdated raise
A raise is often approved after the date it takes effect, so the first paychecks at the new rate are followed by a catch-up payment for the weeks in between. That payment is retroactive pay, or back pay.
Back pay = hourly raise × all hours worked in the period + half the hourly raise × overtime hours in the period
So each regular hour gets the raise and each overtime hour gets 1.5 times the raise.
For employees owed overtime under federal law (non-exempt employees), the overtime part is required. A retroactive raise increases the regular rate for the whole period it covers, so each overtime hour worked in that period is owed time and a half of the raise. The regulation's own example: a raise of 10 cents an hour means 15 cents more for each overtime hour, whatever the employer and employee agreed.
Worked example: a $1.00 an hour raise takes effect on Tuesday, September 1, 2026, and is first paid from Thursday, October 1. September has 22 weekdays, so at 40 hours a week that is 176 hours, or $176.00. Ten overtime hours on top of those 176 add 10 × $1.50 = $15.00. Back pay owed: $191.00. A raise paid as one lump sum for the period is spread back over the hours of that period first (29 CFR 778.303).
For a salaried raise, the calculator turns the yearly raise into an hourly one (yearly raise ÷ 2,080 at 40 hours a week), so each weekday in the period is worth the yearly raise ÷ 260. A 3% raise on $70,000 is $2,100 a year, or $8.08 a weekday; six weeks of 30 weekdays is $242.31. The calculator counts the raise date and not the date the new rate started, and it estimates hours from weekdays unless you type the real hours.
29 CFR 778.303, Retroactive pay increases.
What a raise is worth after inflation
A raise only adds buying power when it beats the rise in prices over the same year. The real raise is not the raise minus inflation but a ratio:
Real raise = (1 + raise ÷ 100) ÷ (1 + inflation ÷ 100) − 1
A 5% raise in a year when prices rose 3% is 1.05 ÷ 1.03 − 1 = 1.94% more buying power. A 2% raise in the same year is a 0.97% cut in real terms. The U.S. Bureau of Labor Statistics publishes the Consumer Price Index each month; type the 12-month change you want to compare against into the optional inflation field.
Questions
How do I calculate a 3% raise?
Multiply your pay by 1.03. $20.00 an hour becomes $20.60, and $50,000 a year becomes $51,500.
How do I find the percentage of my raise?
Subtract the old pay from the new pay, divide by the old pay and multiply by 100. $48,000 to $52,000 is $4,000 ÷ $48,000 × 100 = 8.33%.
What is a 5% raise on $50,000?
$2,500 a year, for a new salary of $52,500. That is $208.33 more a month, or about $1.20 more an hour at 2,080 hours a year.
Does back pay for a raise include overtime?
Yes, if you are owed overtime under US federal law. A retroactive raise raises the regular rate for the whole period it covers, so each overtime hour worked in that period is owed 1.5 times the hourly raise: a 10-cent raise means 15 cents for each overtime hour (29 CFR 778.303).
How is back pay for a raise calculated?
Multiply the hourly raise by all hours worked between the raise date and the first paycheck at the new rate, then add half the hourly raise for each of those hours that was overtime.
Is a 10% monthly raise the same as a 10% yearly raise?
Yes. A percent raise is the same percent in every period: 10% more a month is 10% more a year. A dollar raise is not: $100 more a month is $1,200 more a year.
Sources
- 29 CFR 778.303, Retroactive pay increases (eCFR)
- 29 CFR 778.113, Salaried employees, general (eCFR)
- U.S. Bureau of Labor Statistics, Consumer Price Index
- Rules checked
- October 27, 2026
- Written by
- SumTrue
- Tested against
- Published test cases
Not legal, tax or payroll advice. Figures are pay before tax.