When you negotiate a raise or receive an annual review, the % figure tells you the headline change. The calculator above translates that into your new monthly take-home — which is the only figure that matters for budgeting.
The maths
New salary = Current salary × (1 + raise % / 100)
For $35,000 + 5%: $35,000 × 1.05 = $36,750. $1,750 annual increase, $146/month gross.
Take-home reality at different income levels
The % you actually keep of a raise depends on your marginal federal tax bracket, plus FICA (7.65% for Social Security + Medicare, on income up to the annual Social Security wage base), plus any state income tax. Because US federal brackets are marginal, a raise is taxed at your top bracket rate, not your average rate across your whole salary. Roughly: a raise landing in the 12% federal bracket keeps around 80-85% after federal tax and FICA before state tax; a raise landing in the 22-24% brackets keeps around 68-75%; a raise landing in the 32%+ brackets keeps around 60-65% — all before any state income tax, which varies from 0% (nine states have none) to over 13% (California's top rate) depending on where you live. The self-employment tax calculator covers the self-employment side if any portion of your income is 1099 rather than W-2.
Real vs nominal raises
A 3% raise during 4% inflation is a real-terms pay cut. Compare your raise to US inflation (CPI), not to zero:
- Real-terms cut: raise < inflation
- Real-terms freeze: raise = inflation
- Real raise: raise > inflation
US CPI has typically run in the 2-4% range in non-crisis years (spiking well above that during 2021-2022's inflation surge). An ‘above-inflation’ raise is the one that's actually growing your purchasing power — anything else is treading water or losing ground in real terms, even though the paycheck number went up.
Cumulative raises over time
Early-career raise trajectory has enormous long-term impact:
- 3% annual raises × 20 years: 80% increase
- 5% annual raises × 20 years: 165% increase
- 7% annual raises × 20 years: 287% increase
$30k starting → $54k (3%), $80k (5%), $116k (7%) after 20 years. The compounding effect is exactly why job-hopping every 2-3 years (which commonly yields 10-25% jumps per move) tends to outpace staying in one role collecting 3% annual increments — internal raises are frequently capped by company budget policy in a way external offers aren't.
What this calculator doesn’t include
- 401(k) or other pre-tax retirement contributions (reduce taxable income — the actual take-home hit from a raise is smaller once these are factored in)
- State and local income tax (varies enormously by location — nine states have no state income tax at all)
- Bonus structures (one-off payments, taxed differently at the payroll-withholding stage than regular salary)
- Federal student loan repayment under income-driven plans (payment amounts are typically a percentage of discretionary income, which can rise when a raise increases that discretionary income figure)
- Multi-year compounding
For the fullest take-home picture on the new salary figure, use the hourly-to-salary calculator to check the annualized number, then the self-employment tax calculator above if part of your income is 1099.