Pay Raise Calculator
The raise, the tax on it and what inflation takes back
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Planning indicator only. It does not assess every part of a household's finances or replace individualized professional advice.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your current annual salary — the figure the raise is a percentage of.
- 02
Enter the raise as a percentage. Or leave that at zero and enter a salary you are aiming for instead: the page derives the percentage you would have to ask for and reports it back.
- 03
Set the inflation figure you want to measure against. This is the field that turns a nominal raise into a real one, and a raise below it is a pay cut whatever the letter says.
- 04
Enter your top federal bracket — the whole increment is taxed there, not at your average rate — then your state rate, and the number of years you expect to carry the raise.
- 05
Check the pay periods a year, then read the headline against the two figures beside it: the per-paycheck amount, which is the one that will actually appear, and the real change after inflation. The ladder underneath prices 2%, 3%, 4%, 5%, 7% and 10% on the same salary.
Formula
New salary = current salary × (1 + raise %). If you leave the percentage blank and give a target salary instead, raise % = (target ÷ current − 1) × 100. Increase = new salary − current salary. Tax on the increase = increase × marginal federal rate + increase × state rate + FICA on the slice, where FICA is 6.2% only on the part of the increase still below the $184,500 Social Security wage base, plus 1.45% Medicare on all of it, plus 0.9% Additional Medicare Tax on the part above $200,000 of wages from this employer. After tax = increase − that tax. Per paycheck = after tax ÷ pay periods a year. Real terms use the exact form, not subtraction: real new salary = new salary ÷ (1 + inflation), real raise % = ((1 + raise %) ÷ (1 + inflation) − 1) × 100. The raise that merely holds even = current salary × inflation. Carried forward, the cumulative value after N years is N × the increase gross and N × the after-tax figure, with each year's real value discounted by (1 + inflation) raised to that year.
Example
A 4% raise on $68,000, measured against 3% inflation, at a 22% federal bracket with no state income tax, biweekly pay. The new salary is $70,720 and the increase is $2,720. Tax on the increment: $598 federal at 22%, $169 of Social Security at 6.2% (the whole increase sits well below the $184,500 wage base), $39 of Medicare at 1.45%, nothing to the state — $806 in total. That leaves $1,914 after tax, a keep rate of 70%, which is $74 a paycheck or $159 a month. In real terms $70,720 buys what $68,660 buys today, a gain of $660 a year and a real raise of 1.0%; a 3% raise — $2,040 — would have held you exactly level. Carried ten years with no further increase, the raise is worth $27,200 gross, $19,135 after tax, and $16,323 in today's money. The ladder on the same salary: 2% adds $957 after tax but costs you $660 a year in real terms, 3% is dead level, 5% adds $2,392, and 10% adds $4,784 — $184 a paycheck.
Definitions
- Marginal rate
- The rate of the bracket your last dollar of income falls in. It is the correct rate for any increment — a raise, a bonus, an hour of overtime — because that money stacks on top of everything you already earn.
- Effective rate
- Total tax divided by total income: an average across every bracket you pass through. Always lower than the marginal rate, and always the wrong tool for pricing a raise.
- Real terms
- The value of money after inflation. A 4% raise against 3% inflation is a real raise of 0.97%, not 1% — the exact form divides rather than subtracts.
- Social Security wage base
- $184,500 for 2026. Wages above it carry no 6.2% Social Security tax at all, though Medicare's 1.45% continues without any ceiling.
- Supplemental wages
- Bonuses, commissions and equity vests, withheld at a flat 22% rather than through your W-4. A raise is ordinary wages and never uses that rate.
Good to know
Why a raise is taxed at the top of your income
There are two rates you could apply to a raise and only one of them is right. Your EFFECTIVE rate is total tax divided by total income — an average across every bracket you have passed through, most of which charged 10% or 12%. Your MARGINAL rate is the rate of the bracket your last dollar falls in. A raise is not average income: it is the last money in, stacked on top of every dollar you already earn, so the correct rate on it is the marginal one. Using the effective rate would understate the tax and overstate what lands in your account, which is precisely the error that makes a raise feel like it went missing. On $68,000 with a 4% raise, the increment is $2,720 and the federal bill on it is $598 at 22%. Payroll tax then behaves differently again, and the difference is worth understanding. Social Security takes 6.2% but only up to the $184,500 wage base for 2026, so a raise entirely below the base carries the full amount — $169 here — while a raise that straddles the base carries 6.2% on the part below it and nothing above, and a raise entirely above it escapes Social Security altogether. Medicare's 1.45% has no ceiling at all and takes $39. The 0.9% Additional Medicare Tax begins once one employer has paid you more than $200,000, an employer-level rule with no filing-status branch. Add it up: $806 of tax on $2,720, leaving $1,914 and a keep rate of 70%. Add a 5% state income tax and the keep rate falls to about 65%; in the nine states that levy nothing on wage income it stays at 70%.
The bracket myth, and the cliffs that are actually real
No raise has ever made anyone worse off by crossing a tax bracket, and it is worth saying so as bluntly as possible, because this belief talks people out of overtime, out of promotions and out of asking for money. The federal schedule is marginal: only the dollars ABOVE a threshold pay the higher rate, and every dollar below it is taxed exactly as it was before. Move from the 22% band into the 24% band on a $1,000 raise and the very worst case is $240 of tax on that $1,000. You are $760 better off. There is no arrangement of brackets under which earning more leaves you with less, because each bracket applies only to its own slice. What IS real is a benefits cliff, and confusing the two is how the myth survives. A cliff is a threshold where a benefit stops entirely rather than tapering, so a dollar of extra income can cost far more than a dollar. The ACA premium subsidy, childcare assistance, SNAP, Medicaid eligibility and some housing programmes all have thresholds of this shape, and an income-driven student-loan payment recalculated on a higher income can rise by more than the raise nets. Those are worth checking before accepting a large increase if you are near one. But they are eligibility rules for specific programmes, not features of the tax code, and none of them is triggered by a bracket boundary. If someone tells you a raise will cost you money, ask which programme they mean. If they cannot name one, they mean the myth.
Below inflation is a pay cut, and the arithmetic is not subtraction
The number in the letter is nominal. The number that matters is real, and the two diverge every single year. The common shortcut — raise minus inflation — is close enough at small figures but it is not the right form, and it drifts badly once either number is large. The exact calculation divides: real raise = ((1 + raise) ÷ (1 + inflation)) − 1. A 4% raise against 3% inflation is 1.04 ÷ 1.03 − 1 = 0.97%, not 1%. On $68,000 the new $70,720 buys what $68,660 buys today, so the real gain is $660 a year. To have merely held your ground you needed $70,040, which is a 3% raise or $2,040 — and that figure, the raise that changes nothing, is the one to have in mind before any conversation about pay. Anything under it is a pay cut in everything except the number on the payslip, and it will be presented as good news. The compounding version is where a run of them becomes visible: three consecutive 2% raises against 3% inflation leave you roughly 3% poorer than you started, on a salary that has risen 6% in nominal terms. Nobody experiences that as a series of pay cuts, because each individual letter announced an increase, and that asymmetry is exactly why the real figure has to be computed rather than felt. It is also the strongest thing you can bring to a review meeting: not that you would like more money, but that the offer on the table leaves you materially worse off than last year, with the arithmetic to show it.
A raise is a base, not a payment
The most underrated property of a raise is that it does not happen once. It becomes the base every future calculation runs on, and that is what separates it from a bonus of the same size. Over ten years with no further increase at all, a $2,720 raise is worth $27,200 gross, $19,135 after tax, and $16,323 once 3% inflation is allowed for — and that is the pessimistic case, because every future raise, every bonus target expressed as a percentage, the employer match on your 401(k) and frequently a pension formula are all computed on the higher base. A bonus of $2,720 pays $2,720 once, is withheld at the flat 22% supplemental rate rather than through your W-4, and lifts nothing. Where an employer offers a choice between the two, the raise wins over any horizon longer than a year, and it is not close. Two practical points follow. The first is currency: a raise sounds completely different expressed as a percentage than as a dollar amount, and completely different again per paycheck. $2,720 sounds like a holiday; $74 a paycheck sounds like a phone bill; 4% sounds like policy. Choose the framing that makes your request sound proportionate and be ready with all three, because the person across the table is comparing it to a budget line either way. The second is timing: a raise is the cheapest possible moment to raise your 401(k) percentage, because the deferral comes out of money your budget has never seen and never adjusted to. Taking half a raise and saving half of it is a decision that costs nothing in felt terms and compounds for the rest of your working life.
Frequently asked questions
How much of a raise do I actually keep?
About 70 cents in the dollar for a typical middle-bracket earner, and the exact figure is on the page. A $2,720 raise on $68,000 at a 22% bracket with no state tax loses $598 to federal income tax, $169 to Social Security, $39 to Medicare and nothing to the state — $806 in all, leaving $1,914. That is a 70% keep rate. Add a 5% state income tax and the keep rate falls to about 65%.
Why is the raise taxed at 22% when my effective rate is much lower?
Because every dollar of an increment sits above every dollar you already earn. Your effective rate is an average across all your income, most of which was taxed at 10% and 12%; the raise is not average income, it is the last money in, so it is taxed at the rate of the bracket your last dollar falls in. Using your effective rate here would understate the tax and overstate the raise, which is why the page asks for the marginal rate instead.
Can a raise push me into a higher bracket and leave me worse off?
No. This is the single most persistent myth in personal finance and it talks people out of overtime and out of asking for money. Only the dollars above the threshold pay the higher rate; every dollar below it is taxed exactly as before. Crossing from the 22% band into the 24% band on a $1,000 raise costs $240 at worst, not a penny more, and you are $760 better off. What can genuinely leave you worse off is a benefits cliff — an ACA subsidy, a childcare subsidy, an income-driven student-loan payment — but that is a different mechanism entirely and it has nothing to do with the bracket schedule.
Is my raise keeping up with inflation?
Compare the two percentages, but do the arithmetic properly rather than subtracting. A 4% raise against 3% inflation is not a 1% real raise: it is 1.04 ÷ 1.03 − 1, which is 0.97%. On $68,000 the new $70,720 buys what $68,660 buys today, a real gain of $660 a year. To have merely stood still you needed $70,040 — a 3% raise, or $2,040. Anything below that is a pay cut in everything but the number on the letter.
What raise should I ask for to reach a specific salary?
Leave the percentage at zero and put the salary you are aiming for in the target field. The page works backwards to the percentage, then prices it: what it adds gross, what it adds after tax and what it adds per paycheck. Ask in whichever currency makes the number sound reasonable — the same request reads very differently as '8%' and as '$5,400', and the person on the other side of the table is comparing it to a budget line either way.
Is a raise better than a bonus of the same size?
By a wide margin over any horizon longer than a year. A bonus is supplemental wages, so payroll withholds a flat 22% rather than running it through your W-4, and it is paid once. A raise pays the same amount again every year you stay, and it lifts the base that your next raise, your bonus target, your 401(k) match and often your pension formula are all computed on. Over ten years a $2,720 raise is worth $27,200 gross and $19,135 after tax, with no further increase at all.
Why does part of my raise escape Social Security?
Because Social Security stops at a wage base — $184,500 for 2026 — while Medicare never stops. A raise entirely below the base carries the full 6.2%; a raise that straddles it carries 6.2% on the part below and nothing on the part above; a raise entirely above it escapes Social Security altogether. It is the one point on the income curve where an extra dollar is taxed less than the dollar before it, and it is why a raise across the wage base feels unexpectedly good in the paycheck.
Why does the raise look so much smaller per paycheck?
Because an annual figure divided by 26 is a small number, and nobody thinks in 26ths. $2,720 sounds like a holiday; $1,914 after tax across 26 pay periods is $74 a check, which is a phone bill. There is no trick in it — it is tax at your marginal rate plus 7.65% of payroll tax, divided by a number of paychecks most people never have in mind when they hear the annual figure. Knowing the per-paycheck number in advance is what stops the raise feeling like it went missing.