A salary increase percentage compares your raise with your old pay. The old salary is the baseline, even when you already know the new amount.
Compare your old and new salary
Find the percentage from two salaries
Use this formula:
Salary increase % = ((New salary − Old salary) ÷ Old salary) × 100Suppose annual pay rises from $52,000 to $56,160.
- Find the raise: $56,160 − $52,000 = $4,160.
- Divide by the old salary: $4,160 ÷ $52,000 = 0.08.
- Multiply by 100: 0.08 × 100 = 8%.
The salary increase is 8%. The dollar increase is $4,160 per year before taxes and deductions.
Calculate new pay from a raise percentage
If you know the raise rate, multiply the current salary by one plus the rate in decimal form.
New salary = Old salary × (1 + Raise % ÷ 100)For a 4.5% raise on $68,000, the multiplier is 1.045. The new annual salary is $68,000 × 1.045 = $71,060.
The same rule works for hourly pay. A 6% increase on $22.50 per hour gives $22.50 × 1.06 = $23.85 per hour.
Compare the same kind of pay
Compare annual salary with annual salary, or hourly rate with hourly rate. Do not compare an annual number with a monthly paycheck. Bonuses, overtime, benefits, and taxes can also make take-home pay change by a different percentage.
For a general before-and-after method, see percentage increase versus percentage change. If you only know the new salary and raise rate, use the reverse percentage guide.
The useful takeaway
Use the old salary as the denominator. The percentage describes the raise relative to what you earned before, while the dollar difference shows the actual increase in pay.