| Employee | Current Salary | Raise Type | Raise Input | Bonus | Tax Rate | Inflation | Midpoint |
|---|---|---|---|---|---|---|---|
| Ayesha | 120,000 | Percent | 6% | 10,000 | 20% | 7% | 130,000 |
| Bilal | 85,000 | Amount | 4,000 | 0 | 15% | 5% | 90,000 |
| Sara | 60,000 | Percent | 3.5% | 2,500 | 10% | 6% | 70,000 |
- Increase (percent) = Current Salary × (Raise % / 100)
- Increase (amount) = Raise Amount
- New Salary = Current Salary + Increase
- Per‑pay = Annual Value ÷ Pay Periods
- Net Raise ≈ Increase × (1 − Tax Rate/100)
- Real Raise % = (New/Current)/(1+Inflation) − 1
- Compa % = Salary ÷ Midpoint × 100
- Midpoint Gap = Midpoint − Salary
- Enter the employee’s current annual salary and pay frequency.
- Select raise type: percent or flat annual amount.
- Optionally add bonus and equity to see total reward context.
- Add estimated tax and inflation to explain net and real impact.
- Enter market midpoint to check compa ratio and pay position.
- Click Calculate Raise, then export CSV or PDF for documentation.
Raise percentage signals
A 3% raise on a 120,000 salary adds 3,600 annually, or 300 monthly. A 6% raise adds 7,200 annually and indicates impact. On a 60,000 salary, those same rates add 1,800 or 3,600, which can meaningfully change retention outcomes in early-career bands.
Flat increases and compression
A flat 4,000 increase equals 6.67% on 60,000 but 3.33% on 120,000. This is useful when pay compression appears after market resets. If two employees differ by 2,500 today, a uniform 4,000 can preserve relative spacing, while a uniform 4% may unintentionally narrow it. Flat amounts also support minimum adjustments, such as guaranteeing at least 150 per paycheck on biweekly cycles.
Per-pay impact for budgeting
For biweekly payroll (26 periods), a 5,200 annual raise equals 200 per paycheck. For monthly payroll (12 periods), it is 433.33 per month. Convert raises to per-period numbers to estimate cash-flow timing, and to validate that managers understand what employees will see each pay run. When effective dates land mid-cycle, prorated payouts can be approximated by dividing the per-pay amount by working days.
Net versus gross messaging
If marginal tax is 20%, a 6,000 gross raise is roughly 4,800 net. At 30%, net drops to about 4,200. Showing both values supports clearer conversations and reduces disappointment when take-home pay changes less than expected. The calculator applies tax to the raise only, which keeps comparisons consistent across scenarios. Pair this with bonus context to avoid overstating base-pay movement.
Inflation and real purchasing power
When inflation is 7%, a 5% nominal raise becomes about −1.87% real. Even a 10% nominal raise becomes about 2.80% real at 7% inflation. This context supports cost-of-living adjustments and helps leaders explain why “standard” merit budgets may not maintain purchasing power during high-inflation periods. Many HR teams flag roles with negative real raises for review.
Market midpoint and compa ratio
With a midpoint of 130,000, a 120,000 salary has a 92.31% compa. After a 7,200 raise, compa becomes 97.85%. If the band range is 80%–120%, this move shifts the employee closer to target while keeping headroom for growth. Tracking midpoint gaps alongside performance ratings improves internal equity decisions. A midpoint gap shrinking from 10,000 to 2,800 is a measurable signal of pay-position progress.
How do I choose percent versus flat amount?
Use percent for consistent merit cycles and band alignment. Use flat amounts to fix compression, retention gaps, or to standardize increases across similar roles and levels.
Does the calculator include taxes accurately?
No. It applies a single marginal rate to the raise for a quick estimate. Actual withholding depends on jurisdiction, deductions, and payroll rules. Confirm with payroll or finance.
Why is the inflation-adjusted raise sometimes negative?
If inflation exceeds the nominal raise, real purchasing power declines. The metric helps explain why employees may feel no improvement despite a positive raise percentage.
What is a good compa ratio target?
Many organizations target roughly 90%–110% depending on performance, tenure, and role scarcity. Use your pay philosophy and band design as the primary guide.
Can I use this for promotions?
Yes. Enter the proposed increase as a percent or amount, then compare new compa to midpoint. Add notes to document scope, level change, and internal equity checks.
How should I document decisions for audits?
Include effective date, raise rationale, market reference, and manager notes. Export CSV or PDF and store it with approval records and compensation cycle documentation.