The short answer
- New pay = old pay × (1 + raise %). A 4% raise on $60,000 is $2,400, for $62,400.
- You keep roughly 70% to 80% of a raise after federal tax, Social Security and Medicare, and less in states with income tax.
- A higher tax bracket applies only to the dollars above the line, so a raise never lowers your take-home pay.
- Prices rose 3.4% in the 12 months to August 2026. A smaller raise is a pay cut in buying power.
Percent and dollars
To turn a percentage into dollars, multiply your current pay by the percentage. To go the other way, divide the raise by your old pay. A $3,000 raise on $60,000 is 5%. The percentage calculator does any percentage change.
| Raise | Dollars a year | New salary | Per biweekly paycheck |
|---|---|---|---|
| 2% | $1,200 | $61,200 | $46.15 |
| 3.4% | $2,040 | $62,040 | $78.46 |
| 4% | $2,400 | $62,400 | $92.31 |
| 5% | $3,000 | $63,000 | $115.38 |
| 10% | $6,000 | $66,000 | $230.77 |
Hourly raises
For hourly workers, multiply the raise by the hours you work in a year. A full-time year is 2,080 hours, so each $1 an hour is $2,080 a year. Going from $20 to $21 is a 5% raise. After tax in Texas it adds $1,671 a year, or $64.28 a biweekly paycheck. The hourly paycheck calculator shows your whole paycheck at the new rate.
A 4% raise, line by line
- Raise a year$2,400
- Federal income tax (12%)−$288
- Social Security and Medicare (7.65%)−$184
- Texas income tax$0
That is $74.17 more in each of 26 paychecks, against $92.31 more before tax.
How much of a raise you keep
Every extra dollar is taxed at your top rates: your federal bracket, 7.65% for Social Security and Medicare (until your pay passes $184,500, when only Medicare remains) and your state’s top rate. Add them up to find the tax on each dollar of the raise.
| Pay before the raise | Federal bracket | Tax per extra dollar | Kept |
|---|---|---|---|
| $60,000, 4% raise | 12% | 19.65% | 80.3% |
| $100,000, 5% raise | 22% | 29.65% | 70.3% |
State tax on a raise
State income tax takes its share of a raise too. The same 4% raise on $60,000 adds this much take-home a year:
The tax bracket myth
Many people fear a raise that pushes them into a higher bracket. Federal income tax is marginal: each rate applies only to the income inside its band. If a raise crosses from the 12% to the 22% bracket, only the dollars above the line pay 22%. Everything below is taxed as before. The tax bracket calculator shows where your income falls.
A raise always raises take-home pay
No federal bracket takes more than 37 cents of a dollar, and with payroll and state tax most people keep well over half of any raise.
Example: a raise that crosses a bracket
- Raise$6,000
- Taxable income goes from $45,900 to $51,900
- $4,500 taxed at 12%−$540
- $1,500 above $50,400 taxed at 22%−$330
- Social Security and Medicare−$459
The worker keeps 77.8% of the raise. Without the higher bracket it would have been 80.3%: the difference is $150 a year, not a loss.
Raises and your 401(k)
If you save a percentage of pay, your 401(k) contribution rises with a raise, and so does any employer match. With 6% going to a traditional 401(k), the 4% raise on $60,000 adds $144 a year to savings and $1,802 to take-home. Raising your contribution rate by a point each time you get a raise is a painless way to save more: you never see your paycheck fall. See the 401(k) calculator.
Real raise: beating inflation
A raise only improves your standard of living if it beats inflation. Your real raise is (1 + raise) ÷ (1 + inflation) − 1. The Consumer Price Index for All Urban Consumers (CPI-U) rose 3.4% in the 12 months to August 2026.
| Raise | Real raise | New $60,000 pay in today's dollars |
|---|---|---|
| 2% | −1.35% | $59,188 |
| 3.4% | 0.00% | $60,000 |
| 4% | +0.58% | $60,348 |
| 5% | +1.55% | $60,928 |
| 10% | +6.38% | $63,830 |
The raise you need to stand still
To keep the same buying power, your pay must rise by the inflation rate: $2,040 on $60,000 at 3.4%. The federal brackets and standard deduction rise with inflation each year, so a raise that only matches inflation leaves your tax share about the same.
Raises compound
Each raise is a percentage of a bigger salary than the last. Starting from $60,000, with 3% inflation:
| Yearly raise | After 10 years | In today's dollars | After 20 years | In today's dollars |
|---|---|---|---|---|
| 2% | $73,140 | $54,423 | $89,157 | $49,364 |
| 3% | $80,635 | $60,000 | $108,367 | $60,000 |
| 4% | $88,815 | $66,086 | $131,467 | $72,790 |
| 5% | $97,734 | $72,723 | $159,198 | $88,144 |
After 20 years, a 4% raise each year instead of 2% is worth $23,426 a year more in today’s dollars.
How long until your pay doubles
The rule of 72 gives a close estimate: divide 72 by the raise percentage.
Merit, cost-of-living and promotion raises
- Given to
- Everyone
- Aim
- Keep pace with prices
- Typical timing
- Once a year
- Given to
- Strong performers
- Aim
- Reward results
- Typical timing
- After a review
- Given to
- A new role
- Aim
- Pay for bigger duties
- Typical timing
- Any time
Credits and benefits that shrink
Some tax credits fall as income rises. The earned income credit drops by up to 21.06 cents for each extra dollar in its phase-out, on top of tax, and the child tax credit falls by $50 for each $1,000 above $200,000 ($400,000 joint). Health insurance subsidies and some state benefits also depend on income. A raise is still almost always worth taking, but the share you keep can be lower than the bracket suggests. Check with the earned income credit calculator.
When the raise reaches your paycheck
A raise starts with the first full pay period after its effective date. A backdated raise is usually paid as a lump sum; employers can withhold federal tax on it at a flat 22% as supplemental wages. Your real tax is settled on your return, so any over-withholding comes back.
Asking for a raise
- Find what your role pays at other employers in your area.
- List your results in numbers: sales, savings, projects delivered.
- Ask for a specific yearly figure in dollars, before budgets are set.
- If the answer is no, ask what would earn a raise and when to revisit it.
Comparing a raise with a new job
Compare offers by yearly take-home pay plus benefits, not headline salary. A 401(k) match of 4% on $60,000 is $2,400 a year, the same as a 4% raise, and employer health cover can be worth thousands more. A move to a state with income tax can take back much of a bigger salary. The paycheck calculator shows take-home pay in every state.