Annual Raise Calculator

How to Use This Annual Raise Calculator

1. Enter your starting salary — your current annual pay before taxes.
2. Set your expected annual raise percentage — use the presets (2%–8%) or type a custom value. If you're unsure, 3–4% is the US average for merit raises. Not sure what counts as a good raise percentage? We have a guide for that.
3. Choose the number of years — how far into the future you want to project (1–30 years).
4. Read your results — the summary cards show your final salary, total dollar increase, and total growth percentage. The bar chart and table give you the year-by-year breakdown.

How Compound Annual Raises Work

Annual raises don't add up linearly — they compound. Each year's raise is calculated on your current salary, not your original starting salary. This means every raise builds on top of all previous raises, creating accelerating growth over time.

For example, a 4% raise on a $50,000 salary gives you $2,000 in year one. But in year two, the 4% is calculated on $52,000 — giving you $2,080, not $2,000. Over 10 years, this compounding effect means you earn $74,012instead of the $70,000 you'd expect from simple multiplication ($50,000 + 10 × $2,000). That's an extra $4,012 from compounding alone. Want to see the math for a specific percentage? Try our 5% raise calculator or the full raise percentage table.

The mathematical formula is: Final Salary = Starting Salary × (1 + raise%)^years. This is the same compound interest formula used in investing — and it's why consistent raises, even small ones, have such a dramatic long-term impact on career earnings. If you need help working backwards from two salary numbers, see how to calculate raise percentage.

Average Annual Raise by Industry (2025–2026)

Source: Bureau of Labor Statistics Employment Cost Index; ranges as commonly reported by major compensation surveys. Figures represent typical merit increase ranges; promotions and market adjustments are not included. To compare two salary offers side by side, use our comparison tool.

Annual Raises vs. Inflation: Your Real Purchasing Power

Not all raises translate to real income growth. If inflation is 3.3% and your raise is 3%, your purchasing power actually decreased by 0.3%. To gain real income, your annual raise must exceed the current inflation rate.

As of early 2026, the US CPI-U annual inflation rate is approximately 3.3% (Bureau of Labor Statistics, March 2026). This means a 3% raise is effectively a small pay cut, a 4% raise gives you about 0.7% real growth, and a 5% raise gives you roughly 1.7% in real purchasing power. To see exactly how much of your raise you keep after taxes, use our pay raise calculator with after-tax estimate.

Over long periods, even small differences in real growth compound significantly. A 1% real raise (after inflation) over 20 years increases your purchasing power by 22%. A 2% real raise over 20 years increases it by 49%. If you're paid hourly, you can convert your salary to an hourly rate to see what the raise means per hour worked.

Common Annual Raise Scenarios

Annual Raise FAQ

What is a good annual raise percentage?

A 3-4% annual raise is considered average (roughly matching inflation). A 5-6% raise signals strong performance, and anything above 7% typically indicates a promotion or market adjustment. The right number depends on your industry — technology averages 4.5-6%, while retail averages 2.5-3.5%. Use the table above to find your industry benchmark, and our good raise percentage guide for a deeper breakdown.

How much is a $1/hour raise per year?

A $1/hour raise equals $2,080 more per year (at 40 hours/week for 52 weeks). On a $25/hour wage ($52,000/year), that is a 4% raise. On a $15/hour wage ($31,200/year), it is a 6.7% raise — the same dollar amount means a very different percentage depending on your starting pay. Convert your own numbers with our salary-to-hourly calculator.

What is the average raise after 2-3 years at a company?

Most employees receive 3-4% annual merit raises in years 1-3. However, cumulative raises of only 3% per year mean your salary grows just 9.3% over 3 years — barely keeping pace with inflation. If you have not received a promotion or above-average raise by year 3, your real income may have declined. This is why many career advisors suggest evaluating external offers every 2-3 years.

Does my raise keep up with inflation?

Only if your raise percentage exceeds the current CPI inflation rate. As of early 2026, US inflation is approximately 3.3% (BLS). A 3% raise means you are losing 0.3% in purchasing power. A 4% raise gives 0.7% real growth. A 5% raise gives about 1.7% real growth. Use the calculator above to model exactly how inflation erodes or preserves your salary over time.

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