How to Calculate Percentage of Salary Increase: Examples

To calculate the percentage of a salary increase, subtract your old salary from your new salary, divide the difference by your old salary, and multiply the result by 100. The answer tells you exactly how much your pay has grown compared with where it started.

This guide walks through the formula step by step, shows worked examples at several salary levels, explains how to work backward from a percentage to a dollar amount, and covers the mistakes that most often lead to the wrong answer.

The quick answer

Here is the formula:

Raise % = ((New Salary - Old Salary) ÷ Old Salary) × 100

And here is a quick example:

Old Salary = $50,000
New Salary = $55,000

($55,000 - $50,000) ÷ $50,000 × 100 = 10%

A move from $50,000 to $55,000 is a 10% salary increase. If you would rather skip the math, the percentage increase calculator gives you the result instantly.

Once you have your percentage, this quick reference shows how it is commonly viewed:

Common Salary Increases

3% = Typical Annual Raise

5% = Strong Raise

10% = Large Raise

15%+ = Often Promotion-Level

These are general benchmarks, and what counts as strong or large varies by industry, location, and economic conditions.

What is a salary increase percentage?

A salary increase percentage measures how much your pay has grown relative to your previous salary. Instead of saying "I got $2,000 more," it says "my pay went up by 5%." That small change in framing is what makes raises comparable across different jobs, employers, and income levels.

You will see salary increase percentages used to describe several kinds of raises:

Annual raises. The routine increase many employers give after a yearly review.
Promotion raises. The increase that comes with a new title and expanded responsibility.
Merit increases. Raises tied directly to strong individual performance.
Market adjustments. Corrections when your pay has fallen behind what similar roles earn elsewhere.
Retention raises. Increases offered to keep an employee who might otherwise leave.

Using percentages makes it much easier to compare raises across different salary levels. A $3,000 raise means something very different to someone earning $30,000 than to someone earning $150,000, and the percentage captures that difference immediately.

Salary increase formula explained

The formula has only three steps, but each one matters. Skipping or reordering any of them is the most common source of wrong answers.

Step 1: Find the increase amount.

Subtract your old salary from your new salary.

Increase = New Salary - Old Salary

This gives you the raise in dollars. If your salary went from $40,000 to $42,000, the increase is $2,000.

Step 2: Divide by the old salary.

Take the increase from Step 1 and divide it by your original salary, not your new one.

Decimal = Increase ÷ Old Salary

Dividing $2,000 by $40,000 gives 0.05. This number is the raise expressed as a decimal. It is correct, but it is not yet a percentage.

Step 3: Multiply by 100.

Convert the decimal into a percentage.

Raise % = Decimal × 100

Multiplying 0.05 by 100 gives 5. Your raise is 5%.

The old salary is the right base because a percentage increase always answers the question "how much did this grow compared with where it started?" The starting point is the reference, which is why the original salary goes in the denominator.

Salary increase calculation examples

The best way to get comfortable with the formula is to work through a few cases.

Example 1: A $40,000 salary rising to $42,000

Old Salary = $40,000
New Salary = $42,000

Increase:
$42,000 - $40,000 = $2,000

Calculation:
$2,000 ÷ $40,000 × 100

Result:
5%

Example 2: A $50,000 salary rising to $55,000

Old Salary = $50,000
New Salary = $55,000

Increase:
$55,000 - $50,000 = $5,000

Calculation:
$5,000 ÷ $50,000 × 100

Result:
10%

Example 3: A $75,000 salary rising to $82,500

Old Salary = $75,000
New Salary = $82,500

Increase:
$82,500 - $75,000 = $7,500

Calculation:
$7,500 ÷ $75,000 × 100

Result:
10%

Notice that examples 2 and 3 produce the same percentage even though the dollar amounts are different ($5,000 versus $7,500). That is the point of using percentages: both employees received the same proportional raise, even though the larger salary naturally produced a larger dollar figure.

What if the raise is not a round number?

Real raises rarely land on tidy percentages. Suppose your salary goes from $62,400 to $65,000:

Increase:
$65,000 - $62,400 = $2,600

Calculation:
$2,600 ÷ $62,400 × 100 = 4.17%

Round the result to one or two decimal places. A raise of 4.17% is perfectly reasonable to report as "about 4.2%."

What if my pay went down?

The same formula works for a pay cut. The result is simply negative. If your salary drops from $50,000 to $47,500:

Change:
$47,500 - $50,000 = -$2,500

Calculation:
-$2,500 ÷ $50,000 × 100 = -5%

A negative result means a 5% decrease in pay.

Salary increase percentage table

This table shows common raises at two salary levels so you can quickly check where your own number falls:

Old Salary	New Salary	Increase	Percentage
$40,000	$41,200	$1,200	3%
$40,000	$42,000	$2,000	5%
$40,000	$44,000	$4,000	10%
$50,000	$52,500	$2,500	5%
$50,000	$55,000	$5,000	10%

If your salary is not listed, you can estimate quickly by moving the decimal. For a 10% raise, take 10% of your salary by dividing it by 10. For a 5% raise, cut that number in half. For a 3% raise, multiply your salary by 0.03.

How to work backward from a percentage

Sometimes you already know the percentage and need the dollar amount, or you know the offered percentage and want the new salary. Both are simple variations of the same math.

To find the raise amount:

Raise Amount = Old Salary × (Raise % ÷ 100)

For example, a 4% raise on $60,000:

$60,000 × 0.04 = $2,400

To find the new salary:

New Salary = Old Salary × (1 + Raise % ÷ 100)

Using the same example:

$60,000 × 1.04 = $62,400

To find your monthly increase:

Divide the annual raise by 12. A $2,400 annual raise adds about $200 per month before taxes.

This is also useful when you are negotiating. If you want a particular new salary, you can work backward to the percentage you need to ask for, and see whether that ask is realistic compared with typical raises.

Is a 3% salary increase good?

A 3% raise is one of the most common annual increases, which is why it is often treated as the baseline for a routine yearly review. On a $50,000 salary, it adds $1,500 per year, or about $125 per month before taxes.

Whether it is good depends on a few things:

Common annual raises. Many employers give somewhere between 2% and 4% in a normal year, so 3% sits in the middle of that range.
Inflation considerations. If prices rose by 4% over the same period, a 3% raise means your purchasing power slipped slightly even though your paycheck grew. If inflation was 2%, the same raise leaves you modestly ahead.
Career stage. Earlier in a career, when you are gaining skills quickly, a 3% raise may lag behind your actual growth in value. Later in a career, it may be closer to what to expect.

For a deeper look at what counts as typical, see what a standard yearly raise looks like.

Is a 5% salary increase good?

Many employees view a 5% increase as a strong raise. It is noticeably above the typical annual range, and on a $50,000 salary it adds $2,500 per year, or roughly $208 per month before taxes.

A 5% raise is often tied to performance that clearly exceeded expectations, a good year for the company, or a market adjustment that nudged your pay closer to what similar roles earn. It also tends to stay comfortably ahead of inflation in most years, which means you are gaining real purchasing power rather than simply keeping pace.

It is still worth checking context. If your pay was well below market, a 5% raise may help but not close the gap. For the full picture, read whether a 5% raise is good.

Is a 10% salary increase good?

A 10% increase is generally considered a large raise. On a $50,000 salary, it adds $5,000 per year, or about $417 per month before taxes, which is more than three times what a 3% raise would add.

Raises of this size are less common in routine reviews. They typically point to something specific happening, such as a promotion, a retention effort, a significant market correction, or exceptional performance. If you receive a 10% raise without any of those, it is worth understanding why, because that context can help you anticipate what future raises might look like.

See whether a 10% raise is good for a more detailed breakdown.

Percentage increase vs dollar increase

Dollar amounts and percentages can tell very different stories. Consider two employees who each receive the same dollar raise:

Employee A
$40,000 → $44,000
Increase: $4,000
Percentage: 10%

Employee B
$100,000 → $104,000
Increase: $4,000
Percentage: 4%

Both employees got $4,000 more per year. But Employee A's pay grew by 10% while Employee B's grew by only 4%. For Employee A, the raise is a major change in income. For Employee B, it is a modest adjustment.

This is why percentages are the more meaningful way to compare raises. They show how much your pay grew relative to your starting point, which is what affects your financial position. A bigger dollar number does not always mean a bigger raise in proportion.

Dollar amounts still matter in practice, since they are what show up in your paycheck. The best approach is to look at both: the percentage to judge how generous the raise is, and the dollar amount to understand what it does for your monthly budget.

How promotions affect salary increase percentages

Promotion raises often exceed standard annual raises because the employer is pricing a new job, not just adjusting an old one. A larger role with more responsibility usually commands higher pay, and the increase reflects that.

Here is a typical comparison:

Annual Raise:     3%–5%
Promotion Raise:  10%–20%+

On a $50,000 salary, that is the difference between a $1,500 to $2,500 raise and a $5,000 to $10,000 or larger one.

One practical point: when you receive a promotion, calculate the percentage using the same formula. Employers sometimes describe a promotion raise in dollars, and the percentage helps you judge whether it is competitive. For typical numbers, see the average raise percentage for a promotion.

Calculating more than one raise

Many people want to know the total effect of several raises over time. The important rule is that percentages from different years cannot simply be added together, because each raise applies to a different base.

Suppose you receive a 3% raise one year and a 5% raise the next, starting from $50,000:

Starting Salary:         $50,000
After 3% Raise:          $51,500
After 5% Raise:          $54,075

To find the total percentage increase:

($54,075 - $50,000) ÷ $50,000 × 100 = 8.15%

The combined raise is 8.15%, slightly more than the 8% you would get by adding 3 and 5. The difference is small here but grows larger with bigger percentages and more years, because each raise builds on the one before it. To see the full effect over a longer period, try the raise compounding calculator.

Calculating a raise on an hourly wage

The formula works exactly the same way for hourly pay. If your wage goes from $20 to $22 per hour:

Increase:
$22 - $20 = $2

Calculation:
$2 ÷ $20 × 100 = 10%

That is a 10% raise. If you work 40 hours per week, a $2 hourly increase adds about $80 per week, or roughly $4,160 per year before taxes. To convert any hourly rate into an annual figure, use the hourly to annual calculator.

Calculating a raise in a spreadsheet

If you track your salary in Excel or Google Sheets, you can calculate the percentage with a single formula. Put your old salary in cell A1 and your new salary in cell B1, then enter:

=(B1-A1)/A1

Format the result cell as a percentage and the spreadsheet handles the multiplication by 100 for you. This is handy if you want to compare several job offers or track raises across multiple years.

Use our percentage increase calculator

The percentage increase calculator handles the math for any two numbers, so you do not need to work through the steps manually. Enter your old and new figures to calculate:

Salary increases
Raise percentages
Promotion raises
Compensation growth

It is also useful beyond salary, such as for comparing bonuses, hourly rates, or total compensation packages.

Use our raise calculator

If you already know your raise percentage and want to see the dollar impact, the raise calculator works in the other direction. Enter your current salary and a percentage to find:

Your raise amount
Your new salary
Your monthly increase
Your annual increase

You can test several percentages side by side, such as 3%, 5%, and 10%, to see exactly how much each one is worth before your next review or negotiation.

Common mistakes when calculating salary increases

Most errors come from a handful of predictable slips. Watch for these.

Using the new salary as the base.

This is the most common mistake. Dividing the increase by the new salary instead of the old one gives a lower, incorrect percentage:

Wrong:   $5,000 ÷ $55,000 × 100 = 9.09%
Correct: $5,000 ÷ $50,000 × 100 = 10%

Always divide by the original salary.

Forgetting to multiply by 100.

If you stop after the division step, your answer will be a decimal such as 0.10 instead of 10%. The decimal is not wrong, but it is not the percentage. Multiply by 100 to finish.

Confusing dollar increases with percentage increases.

A larger dollar increase does not always mean a larger percentage increase. As the earlier example showed, a $4,000 raise is 10% on a $40,000 salary but only 4% on a $100,000 salary. Always calculate the percentage before deciding which raise is bigger.

Adding percentages from different years.

As shown in the section on multiple raises, two raises of 3% and 5% do not equal exactly 8%, because the second raise applies to a larger base.

Ignoring inflation.

A raise that looks good on paper may not leave you better off. If your raise is 3% and inflation is 4%, your purchasing power fell by roughly 1% even though your salary went up.

Why salary increase percentages matter

Knowing your raise percentage is more than a math exercise. It gives you a clear, comparable number that helps you make better decisions. Specifically, salary increase percentages help you:

Compare compensation growth. See whether your pay is growing faster or slower than it did in earlier years.
Evaluate job offers. Calculate the percentage jump from your current pay to a new offer to judge whether it is worth switching.
Assess promotions. Check whether a promotion raise is in line with typical increases for a move up in responsibility.
Track career progress. Follow your income growth over time and spot years where your pay stalled.
Plan future earnings. Project where your income could be in a few years if raises continue at a similar rate.

When you walk into a salary conversation knowing exactly what percentage you received, what percentage you are asking for, and how it compares with typical raises, you are in a much stronger position than someone relying on a general feeling.

Related career tools

Percentage increase calculator: find the percentage change between two numbers
Raise calculator: calculate your raise amount and new salary
Raise compounding calculator: see how repeated raises add up over the years
Salary calculator: estimate income across pay periods
Job offer comparison calculator: compare offers side by side, including benefits

Frequently asked questions

How do I calculate percentage of salary increase? Subtract your old salary from your new salary, divide by the old salary, and multiply by 100.

What is the formula for salary increase percentage? The formula is ((New Salary - Old Salary) ÷ Old Salary) × 100.

Is a 5% salary increase good? A 5% increase is often considered a strong annual raise, especially when it stays comfortably ahead of inflation.

Is a 10% salary increase good? A 10% increase is generally considered a large raise and may be associated with promotions or exceptional performance.

Why should I calculate my raise percentage? Knowing your raise percentage helps you understand compensation growth and compare salary increases over time.

Can I calculate a raise percentage if my pay went down? Yes. Use the same formula. A negative result means your pay decreased by that percentage.

How do I find my new salary from a raise percentage? Multiply your old salary by 1 plus the raise as a decimal. For a 4% raise, multiply by 1.04.