Salary Hike Calculator

Percentage or absolute

A hike can be expressed either way and they answer different questions. The percentage tells you how your compensation moved relative to where it was, which is what matters for comparing against inflation and against colleagues. The absolute figure tells you what changes in your bank account. When comparing two offers at different base salaries, the percentage is misleading: a 20 percent rise on a small base can be less money than 8 percent on a large one.

Real versus nominal

A rise below inflation is a pay cut in purchasing power. With inflation at 6 percent, a 4 percent rise leaves you roughly 2 percent worse off than the year before despite the number going up. This is the single most useful check to run and the one most often skipped, because the nominal figure feels like progress.

Gross does not translate proportionally to net

Progressive tax means a rise can push part of your income into a higher band, so take-home increases by less than the headline percentage. Crossing certain thresholds can also withdraw benefits or allowances, occasionally producing an effective marginal rate far above the headline band rate. Always model the net change before judging an offer.

Compare total compensation

Base salary is one component. Employer pension contribution, bonus structure and its actual payout history, equity and its vesting schedule, healthcare, and paid leave all carry real value. A role offering 5 percent less base with a pension contribution several points higher can be worth more in total. Convert everything to an annual figure before comparing.

Compounding matters over a career

Rises apply to the new base, so an extra two percentage points once continues to compound for every subsequent year. Over a decade the difference between consistent 3 percent and 5 percent rises is substantial, which is why the base at which you join a company matters more than any single later increase.