Getting a salary increase is always good news. But when someone tells you that your salary has gone up by a certain amount it can be hard to tell what that really means.
For example if you were making $2,000 a month and your new salary is $2,300 you already know that you are getting an extra $300. But is that a big increase? How does it compare with another raise you might be offered?
This is where the salary increase percentage helps.
The calculation is quite simple. You just need to know what your salary was before the increase and what it is now.
If you already know your current salary and your new salary, you can use our Salary Hike Percentage Calculator below to find the exact percentage increase. It only takes a few seconds, and then you can continue reading if you want to see how the calculation works.
Salary Hike Percentage Calculator
How to calculate the increase
Start by finding the difference between your old salary and your new salary.
Let’s say your old monthly salary was $2,000 and your new salary is $2,300.
The difference is:
$2,300 – $2,000 = $300
So you are getting $300 more each month.
Now compare that $300 with your old salary:
$300 ÷ $2,000 = 0.15
Multiply the result by 100:
0.15 × 100 = 15%
Your salary increase is therefore 15%.
The formula looks like this:
(New Salary – Old Salary) ÷ Old Salary × 100
That’s really all there is to it.
Let’s try another salary
Suppose your salary was $1,800 and your employer increased it to $1,980.
At first glance the extra $180 might not seem like much. But let’s see what percentage that represents.
First:
$1,980 – $1,800 = $180
Then:
$180 ÷ $1,800 × 100 = 10%
So the salary increase is 10%.
I find this way of looking at a raise much more useful than just looking at the extra money. A $180 increase can mean very different things depending on how much you were earning before.
What if you receive a yearly salary?
Nothing changes.
You can use the exact same calculation with your annual salary.
For example, imagine your yearly salary was $40,000 and your new salary is $44,000.
You received an extra $4,000.
Now divide that increase by the original salary:
$4,000 ÷ $40,000 × 100 = 10%
So your annual salary increased by 10%.
You can use monthly or yearly figures. Just don’t mix them. If your old salary is monthly, your new salary should also be monthly.
What if you already know the raise percentage?
Sometimes your employer tells you the percentage instead of the new salary.
Let’s say you currently earn $2,500 a month and you are getting a 12% raise.
First work out 12% of $2,500:
$2,500 × 0.12 = $300
Then add the $300 to your current salary:
$2,500 + $300 = $2,800
Your new monthly salary would be $2,800.
This can also be useful when you are negotiating a salary. If you know the percentage you want you can quickly work out the number you should be asking for.
Why calculating the percentage is useful
Imagine two people are talking about their raises.
One person says they received an extra $200 a month. Another person says they received an extra $400.
It sounds like the second person got the better deal.
But what if the first person was earning $1,000 and the second person was earning $8,000?
The first person received a 20% increase.
The second received only a 5% increase.
This is why percentages can tell you more than the actual dollar amount.
It is especially helpful when you are comparing a new job offer with your current salary. Looking at the percentage gives you a quick way to see how much higher or lower the offer really is.
You can also calculate a salary decrease
The same calculation works if your salary has gone down.
For example, your salary was $3,000 and it has been reduced to $2,700.
The difference is $300.
Now compare that $300 with your original $3,000 salary:
$300 ÷ $3,000 × 100 = 10%
Your salary has decreased by 10%.
The important thing to remember is that you always use the old salary as the starting point.
A quick way to check your answer
There is an easy way to make sure your calculation makes sense.
Suppose your salary went from $2,000 to $2,300 and you calculated a 15% increase.
Find 15% of $2,000:
$2,000 × 0.15 = $300
Add that to the old salary:
$2,000 + $300 = $2,300
You arrive at the new salary, so the calculation checks out.
One mistake to watch for
When calculating a salary increase percentage it is easy to divide by the new salary by mistake.
Don’t do that.
The percentage is based on where you started, so the old salary is the number you divide by.
For example, if your salary goes from $2,000 to $2,300, the calculation is based on $2,000.
That small detail makes a difference.
Final thoughts
You don’t need a complicated formula to work out a salary increase.
Take your new salary, subtract your old salary, divide the difference by your old salary and multiply by 100.
Once you get used to it you can do the calculation in less than a minute.
And if you’re comparing job offers or checking a raise from your employer, looking at the percentage can give you a much clearer picture than simply looking at the extra amount of money.
Frequently Asked Questions
How do I calculate my salary increase percentage?
Subtract your old salary from your new salary. Divide the difference by your old salary and multiply by 100.
What is a 10% raise on a $2,000 salary?
A 10% raise is $200, making the new salary $2,200.
What is a 20% raise on a $2,500 salary?
A 20% raise is $500, so the new salary would be $3,000.
Should I use my old salary or my new salary?
Use your old salary. The old salary is the starting point used to calculate the percentage increase.
