Pay Raise Calculator

About this calculator

This calculator measures a pay raise two ways: the nominal increase you see on your payslip, and the real, inflation-adjusted increase that tells you whether your purchasing power actually grew. Enter your current salary and either a raise percentage or your new salary, set the inflation rate you expect, and the result shows the new salary, the cash raise, and — most importantly — whether the raise beats inflation.

How to read your results

The headline figure is your new salary. The two numbers that matter are the nominal raise (the percentage increase in cash) and the real raise (that increase after inflation is taken out). A raise can be positive in cash yet negative in real terms: if your nominal raise is smaller than inflation, your money buys less than before. The "worth in today's money" figure restates your new salary in current purchasing power so you can compare it directly with what you earn now.

How it's calculated

Working in percent mode, the new salary is current × (1 + raise ÷ 100), and the nominal raise percent is the one you entered. In new-salary mode you enter the new figure directly and the nominal raise percent is (new ÷ current − 1) × 100. The cash raise is new − current. The real raise uses the Fisher relationship: real = ((1 + nominal ÷ 100) ÷ (1 + inflation ÷ 100) − 1) × 100. The new salary's value in today's money is new ÷ (1 + inflation ÷ 100), and the purchasing-power change is that figure minus the current salary. The raise beats inflation whenever the nominal raise percent exceeds the inflation rate.

Worked example

Current salary 50,000, a 5% raise, expected inflation 3%.

The new salary is 52,500 — a 2,500 cash raise. In real terms the increase is about 1.94%, not the naive 5 − 3 = 2%, because real growth divides rather than subtracts. The new salary is worth about 50,971 in today's money, so your purchasing power rises roughly 971. Since 5% beats 3% inflation, this raise leaves you genuinely better off.

Frequently asked questions

What is the difference between a nominal and a real pay raise?

A nominal raise is the cash increase in your salary — the number on the offer letter. A real raise subtracts the effect of inflation, showing how much more (or less) you can actually buy. If prices rise faster than your pay, your real raise is negative even though your nominal pay went up.

Why isn't the real raise just the raise percent minus inflation?

Subtraction is a close approximation only for small numbers. The exact relationship divides the growth factors: real raise = ((1 + raise) ÷ (1 + inflation) − 1). For a 5% raise against 3% inflation that gives 1.94%, slightly below the 2% you'd get by subtracting. The gap widens as the percentages get larger.

Does my raise beat inflation?

Your raise beats inflation when the nominal raise percentage is greater than the inflation rate. When it is, your real raise is positive and your purchasing power grows. When the raise equals inflation your real raise is zero — you're standing still — and when it's below inflation you've taken a real-terms pay cut.

What inflation rate should I use?

Use a recent published inflation figure for your country, such as the consumer price index from your national statistics office. A common default is around 3%, but it varies widely by country and year. Because the result depends on the rate you choose, treat the real figures as estimates and try a couple of scenarios.

Can I use any currency?

Yes. The math is currency-invariant — it never converts between currencies, it just labels every money figure in the one you pick. Choose your currency from the salary field and all results, including the inflation-adjusted ones, display in that currency.

Sources

• www.bls.gov/cpi
• www.investopedia.com/terms/r/realincome.asp

Reviewed by the YouCalc Team · Last reviewedJune 26, 2026