Salary Increase Calculator
A rise below inflation is a pay cut.
Work out Salary Increase. A rise below inflation is a pay cut. Counts the thing everyone forgets to count.
Real increase after inflation
0.97%
4% nominal · 1,200 more in the bank
A rise below inflation is a pay cut, and the headline percentage hides it. The real figure uses the Fisher relation rather than subtracting inflation, which matters more the higher both numbers are. The after-tax figure is the one that reaches your account. At a 40% marginal rate a 2,000 rise is 1,200 — and if the rise crosses a threshold, part of it may be taxed at a higher rate than the rest of your salary. Compounding works on salaries too. Consistently beating inflation by two points doubles real income in about 35 years; consistently falling a point behind halves it in 70. Small annual differences dominate a career.
How the Salary Increase Calculator works
A pay rise in real terms and after tax, from either a percentage or an amount. The headline percentage hides both — a 2% rise against 3% inflation is a cut, and at a 40% marginal rate you keep 60% of it.
Also known as: is my pay rise good · pay rise after tax · real terms pay increase · does my raise beat inflation
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
Is my pay rise good?
Compare it to inflation first. Anything below it is a real-terms cut regardless of how the percentage sounds, and the after-tax figure is what actually reaches your account.
How do I calculate a real pay rise?
(1 + rise) ÷ (1 + inflation) − 1, not rise minus inflation. The subtraction shortcut is close at low rates and overstates the result at higher ones.
How much of a rise do I keep?
One minus your marginal rate. At 40% a 2,000 rise is 1,200 — and if it crosses a threshold, part may be taxed at a higher rate than the rest of your salary.
Do small differences matter over a career?
Enormously. Consistently beating inflation by two points doubles real income in about 35 years; falling a point behind halves it in 70.
Should I negotiate percentage or amount?
The amount is what you take home, but the percentage is what compounds into future rises and often into pension contributions. Both matter and they are not interchangeable.
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