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 bands
The % you keep of a raise depends entirely on what tax band the increase falls in:
| Income band | Marginal rate | % kept of raise |
|---|---|---|
| $12,570 - $50,270 | 28% (20% IT + 8% NI) | 72% |
| $50,270 - $100,000 | 42% (40% IT + 2% NI) | 58% |
| $100,000 - $125,140 | 60% (40% IT + 2% NI + PA taper) | 40% |
| $125,140 - $150,000 | 42% | 58% |
| $150,000+ | 47% (45% IT + 2% NI) | 53% |
For most US employees a 5% raise is worth ~3.6% in take-home. The 60% band ($100k-$125,140) is the worst — pension contributions are particularly tax-efficient there.
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
Typical US CPI 2-4%. ‘Above-inflation’ raise is typically the political messaging.
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 favours job-hopping every 2-3 years (which yields 10-25% jumps) over staying put for 3% annual increments.
What this calculator doesn’t include
- Pension contributions (% of gross — reduce taxable income)
- Salary sacrifice arrangements
- Bonus structures (one-off payments)
- Student loan repayments (9% above threshold)
- Multi-year compounding
For full take-home maths, run the new salary through the Take Home Pay calculator.