How to Calculate Salary Increase Percentage
The salary increase percentage formula with worked examples. Learn to calculate a raise percentage from old and new pay in under a minute.
A salary increase percentage tells you how much your pay grew relative to where it started. Employers quote raises as percentages because the same percentage means very different things at different salary levels, so knowing how to compute it yourself keeps the conversation honest.
The salary increase percentage formula
The formula is: salary increase percentage = (new salary - old salary) / old salary x 100. Subtract your old pay from your new pay to get the raise amount, divide by your old pay, and multiply by 100 to get a percentage.
Step-by-step example: $65,000 to $68,250
Walk through it one step at a time:
- Step 1 — find the dollar increase: 68,250 - 65,000 = $3,250
- Step 2 — divide by the old salary: 3,250 / 65,000 = 0.05
- Step 3 — multiply by 100: 0.05 x 100 = 5%
see your new salary after a raise
Worked example: hourly rate $22 to $23.10
The same formula works for hourly pay. The raise amount is 23.10 - 22 = $1.10. Divide by the old rate: 1.10 / 22 = 0.05, which is 5%. Whether you are paid hourly or on salary, the percentage is raise amount divided by old pay.
Dollar increase vs percentage increase
The dollar increase and the percentage increase tell you different things, and you need both. A $3,000 raise is a 5% increase on $60,000 but only a 3.75% increase on $80,000. The dollar number tells you what hits your budget; the percentage tells you how generous the raise is relative to your current pay.
This is why two employees can both get "a 5% raise" and walk away with very different dollar amounts. Always translate a percentage into dollars before you decide whether an offer is good.
Common mistakes to avoid
The single most common error is dividing by the new salary instead of the old salary. That understates the percentage. Always divide the raise amount by what you were making before, not what you will make after.
Another trap is forgetting to annualize. If you get a $2 per hour bump, the percentage is 2 / old hourly rate, but the dollar impact depends on your hours. At 2,080 hours a year, a $2 raise is $4,160 more annually.
Frequently asked questions
What is the formula for salary increase percentage?
Salary increase percentage = (new salary - old salary) / old salary x 100. Divide the raise amount by your previous salary, then multiply by 100.
How do I calculate a raise percentage between two salaries?
Subtract the old salary from the new salary to get the raise amount, divide that by the old salary, and multiply by 100. For example, a move from $50,000 to $52,500 is 2,500 / 50,000 x 100 = 5%.
Do I divide by the old or new salary to get the raise percentage?
Always divide by the old salary. Dividing by the new salary understates the percentage because the new salary already includes the raise.
Does the same formula work for hourly pay?
Yes. Subtract your old hourly rate from your new rate, divide by the old rate, and multiply by 100. A move from $20 to $21.40 is 1.40 / 20 x 100 = 7%.
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Enter your current pay and a raise percentage to see the dollar impact across every pay period.
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