Turn a new-year raise percentage into a new salary, extra pay per paycheck and per hour – and see whether it beats inflation.
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With current salary $60,000, raise 4%, inflation over the year 3%, paychecks per year 26:
New salary: $62,400.00 (+$2,400.00 a year)
+$92.31 per paycheck before tax · +$1.15/hour at 2,080 h · real raise after 3% inflation: 0.97%
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New salary = salary × (1 + raise %). Extra per paycheck = (new − old) ÷ paychecks per year. Real raise = (1 + raise) ÷ (1 + inflation) − 1.
Formula source: New pay = pay × (1 + raise); real raise = (1 + raise) ÷ (1 + inflation) − 1, the standard CPI adjustment. Federal Reserve Bank of Minneapolis – CPI inflation calculator · US Inflation Calculator – current CPI inflation rates (BLS data)
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Extra per biweekly paycheck before tax, and the real raise when inflation is 3%:
| Salary | 3% raise: per biweekly paycheck | 5% raise: per biweekly paycheck | Real raise at 3% inflation (3% / 5%) |
|---|---|---|---|
| $40,000 | $46.15 | $76.92 | 0.00% / 1.94% |
| $60,000 | $69.23 | $115.38 | 0.00% / 1.94% |
| $85,000 | $98.08 | $163.46 | 0.00% / 1.94% |
| $120,000 | $138.46 | $230.77 | 0.00% / 1.94% |
A 3% raise with 3% inflation is a 0% real raise – buying power stays flat. A 5% raise gives a real gain of about 1.9%.
One that beats inflation by a clear margin. A raise equal to inflation keeps your buying power flat; anything below it is a pay cut in real terms.
(New pay − old pay) ÷ old pay × 100. Going from $60,000 to $62,400 is a 4% raise.
Many companies set budgets for the year before January. Ask a few months before the review cycle and bring market data for your role.
$1,800 a year, about $69 per biweekly paycheck before tax.
The Bureau of Labor Statistics publishes the Consumer Price Index every month; use the 12-month change.
A raise meant to match inflation, such as the yearly Social Security COLA.
Sources: US Inflation Calculator – current CPI inflation rates (BLS data) · Federal Reserve Bank of Minneapolis – CPI inflation calculator