Calculate Pay Raise Percentage From Old And New Pay

By The Calcumatix Team Reviewed by Calcumatix Editorial Review 4 min read Updated July 9, 2026

Quick Answer

To work out pay raise rate, subtract old pay from new pay, divide the increase by old pay, then multiply by 100. The formula is ((new pay - old pay) / old pay) x 100, so a rise from 48,000 to 52,800 is 4,800 divided by 48,000, which is 10 percent. Use the same pay span, gross, for both values.

Calculating a pay raise takes six quick steps, and this guide leads with them so you can work out a figure in under a minute. A pay raise rate turns a salary or hourly wage increase into a comparable rate, which is why a 2,000 raise means something different on a 30,000 salary than on a 100,000 one. This guide supports the Year Over Year Percentage Calculator, since both use the same percent-change structure: new value minus old value, divided by old value.

How Do You Calculate A Raise Step By Step?

Start with the old pay because the old pay is the base of the rate. Then find the currency increase, divide by the old pay, and convert the decimal to a percent.

Write down the old pay.
Write down the new pay.
Subtract old pay from new pay.
Divide the increase by old pay.
Multiply the decimal by 100.
Round the result to the number of decimals your pay review uses.

This process works for salaries, hourly wages, stipends, and retainers. For bonuses or commissions, separate the fixed base pay from variable pay unless the offer letter clearly combines them.

Worked example: old salary = 48,000, new salary = 52,800. Subtract: 52,800 − 48,000 = 4,800. Divide: 4,800 ÷ 48,000 = 0.10. Multiply: 0.10 × 100 = 10. The pay raise is 10 percent, shown as 10.0% if the review sheet uses one decimal.

What Is The Pay Raise Percentage Formula?

The steps above are one direct percent-change calculation. OpenStax teaches percent increase by finding the increase first, then comparing it with the original amount. For pay, the original amount is the old salary or old wage.

Formula: pay raise rate = ((new pay − old pay) ÷ old pay) × 100.

Use annual salary with annual salary, monthly pay with monthly pay, or hourly wage with hourly wage. Do not compare an annual salary to a monthly salary unless you convert one value first. The formula only works cleanly when both inputs use the same pay span.

Four checks keep the result honest: match the pay span, so yearly compares with yearly and hourly with hourly; label base pay versus total pay, since a bonus can lift total pay while the base rate holds; keep gross and take-home apart, because tax and benefits change what lands in the bank; and read the rate beside the cash amount, since a small rate on a high salary can still be a big move.

How Do You Calculate Pay Raise Percentage In Excel?

Excel can work out a raise rate with the same percent-change formula. Put old pay in A2 and new pay in B2. Enter =(B2-A2)/A2 in C2, then format C2 as Percentage.

Microsoft gives the same general structure for rate change between two numbers: find the difference, then divide by the original value. In a pay raise sheet, the original value is old pay. If the result is negative, the sheet is showing a pay decrease rather than a raise.

What Pay Values Should You Include Or Exclude?

Use base pay when the question is about a base salary raise. Include overtime, bonuses, tips, or commissions only when the raise offer or pay policy treats them as part of the measured pay amount. This distinction matters because variable pay can move for reasons unrelated to the raise.

For hourly wages, use the old hourly rate and new hourly rate if hours stay separate. If hours also changed, work out the hourly raise first, then work out total pay change in a separate line. This avoids hiding an hour change inside the wage rate.

When Can A Raise Percentage Mislead You?

A raise rate can mislead when the pay base changes or the old pay span differs from the new one. A worker moving from part-time to full-time has a total pay change, but that change is not only a raise. A contractor moving to employee status may also gain benefits, taxes, and deductions that the formula does not measure.

Inflation, local wage rules, tax withholding, benefits, and retirement contributions can change take-home pay after a raise. The formula measures gross pay change only. For a personal budget, review net pay after deductions as a separate step. See the Finance Calculators hub for related tools.

Sources And Notes For Pay Raise Percentage

This guide is for educational estimates only and is not accounting, legal, tax, or financial advice. Ask a qualified expert before making business decisions.

Frequently asked questions

What is the fastest way to calculate a raise percentage?

The fastest way is to divide the raise amount by the old pay, then multiply by 100. If old pay is 48,000 and the raise is 4,800, then 4,800 / 48,000 = 0.10. The raise rate is 10%.

Should I use gross pay or take-home pay?

Use gross pay when you want to measure the official raise rate. Take-home pay changes after taxes, benefits, and deductions, so it answers a different question. For budgeting, work out both gross raise rate and net pay change.

Can I calculate an hourly pay raise the same way?

You can work out an hourly pay raise with the same formula if both values are hourly rates. For example, use old hourly wage and new hourly wage, not weekly pay unless hours stayed the same. Matching the pay span keeps the result clean.

Why is the old pay the denominator?

The old pay is the base because the raise is measured against the starting pay. Percent change always compares the change with the original value. Using the new pay would answer a different question and make the raise look smaller.

What if my new salary is lower than my old salary?

A negative result means the pay changed downward instead of upward. For example, if old pay is 50,000 and new pay is 47,500, then (47,500 - 50,000) / 50,000 = -0.05. The result is a 5% decrease.