How to Figure Out Your Raise Percentage

Understanding the percentage of a salary raise clarifies financial growth and compensation. This calculation helps assess the impact of an increase on earnings. Determining this percentage is a straightforward process that empowers individuals to track financial progress and make informed career decisions.

Gathering Key Information

Before calculating a raise percentage, it is necessary to identify specific financial figures. The two primary pieces of information required are your previous salary and your new salary.

Your previous salary refers to the annual gross income you earned before the raise was implemented. This figure can typically be found on an old pay stub, an employment contract, or a formal offer letter for your previous position.

Your new salary represents the annual gross income you will earn after the raise takes effect. This information is usually communicated through a new offer letter, a compensation adjustment notice, or can be inferred from recent pay stubs reflecting the increased amount. Alternatively, some employers may directly communicate the specific dollar amount of your raise; in such cases, add this to your old salary to determine your new salary.

It is important to ensure these figures reflect your gross income before any deductions for taxes, benefits, or retirement contributions. Pay stubs often detail both gross and net pay, so focusing on the gross amount ensures an accurate basis for the calculation.

Calculating Your Raise Percentage

Once you have identified your old salary and your new salary, you can apply a specific formula to determine the percentage of your raise. The most common method involves subtracting your old salary from your new salary, dividing that difference by your old salary, and then multiplying the result by 100 to convert it into a percentage. This calculation is represented by the formula: [(New Salary - Old Salary) / Old Salary] x 100.

For example, if your old salary was $50,000 and your new salary is $53,000, the calculation would be [($53,000 - $50,000) / $50,000] x 100, resulting in a 6% raise.

If you only know your old salary and the specific dollar amount of your raise, the process is slightly adjusted. First, add the dollar amount of your raise to your old salary to find your new salary. For instance, if your old salary was $60,000 and you received a $2,400 raise, your new salary would be $62,400. Then, apply the same formula: [($62,400 - $60,000) / $60,000] x 100, which yields a 4% raise.

The resulting percentage indicates how much your salary has increased relative to your previous earnings. For example, a 5% raise means your new annual compensation is 5 percent greater than your prior annual compensation. This percentage provides a clear, standardized measure of your pay increase, allowing for easy comparison and understanding of the change in your earning power.