Pay Raise Calculator

Common Questions

How much of a raise do I actually keep?

Every dollar of a raise is taxed at your marginal rate, not your effective rate. For someone in the 22 percent federal bracket with 7.65 percent FICA and a 5 percent state rate, that is about 34.65 percent, leaving roughly 65 cents on the dollar. Higher brackets keep less, and a percentage-based 401(k) diverts more still.

Can a raise ever leave me worse off?

Not through tax brackets, since only the income above a threshold is taxed at the higher rate. It can happen through cliff-edge benefits: losing a Premium Tax Credit for marketplace insurance, income-driven student loan repayment recalculations, or childcare subsidies that cut off at a fixed income. Those are real cliffs and worth checking.

Is a 3 percent raise good?

It depends entirely on inflation. A 3 percent raise in a year of 4 percent inflation is a real pay cut of roughly 1 percent; the same raise when inflation is 2 percent is a genuine gain. Compare against the CPI change over the same period, not against zero.

Should I negotiate salary or a bonus?

Salary, in almost every case. Base pay compounds into every future raise, feeds your 401(k) match if it is percentage-based, and sets the anchor for your next job. A one-time bonus does none of that and is often withheld at a flat supplemental rate. Ten thousand on base is worth far more over five years than ten thousand once.

How does a raise affect my 401(k) contribution?

If you contribute a percentage rather than a fixed dollar amount, the contribution rises automatically with the raise, so less of the increase reaches your paycheck. That is usually a good outcome, but it explains why a raise can feel smaller than expected. The annual deferral limit may also become binding at higher salaries.

What is a typical annual raise?

Merit increase budgets at most large US employers have run in the 3 to 4 percent range for years, with promotion increases typically 8 to 15 percent. Changing employers has historically delivered a larger jump than staying, which is the structural reason job-switching outpaces internal progression.

Does a raise change my withholding automatically?

Yes, payroll recalculates each period based on annualised pay and your W-4, so withholding adjusts without you doing anything. But if the raise pushes you into a new bracket mid-year, the first post-raise check may look odd while the cumulative calculation catches up. Review your W-4 after any large increase.

How do I convert a raise into a monthly figure?

Take the net annual gain and divide by twelve, not the gross. A $6,000 raise at a 35 percent combined marginal rate is about $3,900 net, or $325 a month. Budgeting against the gross monthly figure of $500 is how people end up spending a raise they never received.

Should I ask for a raise or look elsewhere?

Run both through the calculator. An internal 4 percent raise against an external offer 15 percent higher is not close on cash, but the external move carries onboarding risk, a reset on vesting schedules, and possibly unvested equity left behind. Value what you forfeit before ranking the two numbers.