Updated 2026-08-29
How to judge whether a raise is good
There is no single magic number, because a good raise depends on three moving parts: inflation, your market rate, and the reason for the increase. Work through them in order.
- Does it beat inflation? If prices rose and your pay rose by less, your buying power actually fell. A raise that only matches inflation keeps you level -- it is not a reward, it is a hold.
- Does it close your market gap? If you are paid below the going rate for your title, experience, and region, a good raise should shrink that gap, not just nudge your current number.
- What is the reason? A cost-of-living adjustment, a merit increase, and a promotion are three different events with three different expected sizes. Judging a promotion raise against a cost-of-living yardstick will always leave you disappointed.
The healthiest way to read your offer is in real terms: the increase minus inflation. That difference is your genuine gain in spending power.
Turn a raise into a percentage and a dollar figure
The percentage is easy to compute, and seeing the dollars makes the number concrete. The formula is:
Raise percentage = (new salary minus old salary) / old salary x 100
Say you earn 60,000 dollars and are offered 63,000 dollars:
- Increase: 63,000 minus 60,000 = 3,000 dollars
- Percentage: 3,000 / 60,000 = 0.05, or 5 percent
Now translate the percentage back into take-home terms. A 3,000-dollar gross raise is not 3,000 dollars in your bank account, because taxes and FICA apply. Roughly 7.65 percent comes off the top for Social Security and Medicare alone (6.2 percent plus 1.45 percent), plus federal and any state income tax. On that 3,000-dollar raise, expect a few hundred dollars of it to go to withholding before you see the rest. Use the salary-to-hourly calculator to see how the new figure lands per hour and per paycheck.
Merit, cost-of-living, and promotion raises are not the same
Employers use different labels for different situations, and each carries a different expectation.
- Cost-of-living adjustment. An across-the-board bump meant to offset rising prices. It typically tracks inflation and is not a reward for individual performance.
- Merit increase. Tied to your performance review. It is usually modest and is where most annual raises land for people staying in the same role.
- Promotion or market adjustment. Given when your title, scope, or level changes, or when your pay has fallen behind the market. This is where the largest percentage jumps happen, because your job itself has changed.
A common mistake is comparing a merit raise to what a friend received on a promotion. They are different transactions. See our breakdown of how annual pay maps to an hourly rate if you want to compare two offers on equal footing.
Benchmark your raise against your market rate
The percentage only tells you how much your own number moved. It says nothing about whether that number was fair to begin with. To benchmark:
- Find the going rate. Look at posted salary ranges for your title, level, and metro area. Public job listings that include pay bands are useful anchors.
- Locate yourself in the band. A person new to a role sits near the bottom; a seasoned performer should sit higher. If you are near the bottom of the band after several strong years, you have a stronger case.
- Compare the raise to the gap. If the market rate is 15 percent above your pay, a 3 percent raise barely dents the gap. If the market rate is close to your pay, a 3 percent raise may be perfectly reasonable.
The best-supported request pairs a percentage with evidence: your results, your added responsibilities, and the external range for your role.
When a smaller percentage can still be a good deal
Percentage is not the whole story. A lower headline raise can be worth more than a higher one once you count everything the offer changes.
- Total compensation. A 3 percent base raise plus a new bonus target, more employer retirement match, or better health coverage can beat a 5 percent raise with no other changes.
- Pre-tax benefits. Extra employer contributions to a retirement plan or health savings account grow your compensation without adding to your taxable wages.
- Growth and stability. A modest raise attached to a role with a clear path, learning, and security can be more valuable over a few years than a larger raise in a shakier position.
Read every raise as a change to total compensation, not just to the base salary line.
How to ask for a better number
If the offered percentage falls short, you can respond without burning the relationship.
- Anchor on data. Bring your market range and your accomplishments, and ask for a specific figure rather than a vague more.
- Separate the ask from the review. If the annual cycle is fixed, ask what would need to happen for a market adjustment or an off-cycle review.
- Consider the whole package. If base pay is capped, negotiate on bonus, additional retirement match, extra paid time off, or a title change that sets up your next raise.
A clear, evidence-backed request handled professionally is usually respected, even when the answer this cycle is no.
Timing helps too. Raise conversations tend to go better when they are tied to a completed project, a strong review, or a documented expansion of your role, rather than raised out of the blue. If your employer runs a fixed annual cycle, ask in advance what results would justify a stronger number next time, and get that answer in writing where you can. Treating the raise as an ongoing conversation, not a single yearly event, keeps the path to your next increase clear and puts you in a stronger position each cycle.
This guide is general information about pay and is not tax, legal, or financial advice; verify current figures for your situation.
Frequently asked questions
Is a 3 percent raise good?
It depends on inflation and your market rate. If prices rose by about the same amount, a 3 percent raise mostly holds your buying power steady rather than improving it. If you are already paid at or above the market rate for your role, 3 percent can be a fair annual merit increase. If you are underpaid, it barely closes the gap.
What raise should I expect with a promotion?
Promotion raises are generally larger than routine merit increases because your role, title, and responsibilities change. The right figure depends on where the new role sits in its market band, not on your old salary. Benchmark the promotion against the going rate for the new title rather than as a percentage of your previous pay.
How do I calculate my raise percentage?
Subtract your old salary from your new salary, divide by the old salary, and multiply by 100. For example, a jump from 50,000 to 52,500 dollars is 2,500 divided by 50,000, which equals 0.05, or a 5 percent raise.
Does a raise get taxed more?
Your raise is taxed at your ordinary income rates like the rest of your wages, plus Social Security at 6.2 percent and Medicare at 1.45 percent. A raise can push part of your income into a higher federal bracket, but only the portion above the bracket threshold is taxed at the higher rate, so you never lose money overall by earning more.
Should I compare raises by percentage or by dollars?
Use both. The percentage shows how far your own pay moved, while the dollar figure and the resulting take-home pay show what the change means for your budget. Always compare the raise against inflation and your market rate to judge whether it is genuinely good.