Pay raise calculator

See a raise as a percentage, in dollars per hour and per year, and what it costs the business.

In shortNew rate = current rate × (1 + raise % ÷ 100), or current rate + raise in dollars. Annual difference = raise per hour × paid hours per year.

Who uses itOwners, managers and HR planning reviews
WhenAnnual review season or a minimum wage change
You needCurrent rate, raise in percent or dollars, yearly hours
ResultNew rate and the yearly cost of the raise

Run the numbers

The pay raise formula

New rate = current rate × (1 + percent ÷ 100), or current rate + dollar raise.

Annual difference = (new rate − current rate) × paid hours per year.

Employer taxes and benefits linked to pay come on top of this figure.

A worked example

A team of 6 warehouse associates earns $17.50 an hour. A 4% raise brings them to $18.20, an increase of $0.70 an hour. At 2,080 paid hours, that is $1,456 more per person a year and $8,736 for the team, before employer taxes.

Who uses this calculator

Use it to plan annual reviews, compare raise options for a team or answer an employee’s question about what a percentage means in dollars.

Remember that a raise may change overtime and some benefits that depend on pay, so the full cost can be higher than the wage difference.

Another pay raise example

A cafe gives its 9 part-time baristas a flat $1.25 an hour raise, taking them from $15.75 to $17.00. With the raise type set to dollars per hour, the increase works out to 7.94%. Each barista averages 30 hours a week, so at 1,560 paid hours the new annual pay is $26,520, an extra $1,950 per person and $17,550 for the team before employer taxes.

Making sense of the pay raise number

The percentage line helps compare a flat dollar raise with a percent-based budget, since the same $1.25 is a bigger percentage for lower-paid staff. Extra wages assume the hours you enter, so overtime and seasonal swings change the real cost. The figures are gross and leave out employer taxes, benefits tied to pay and any raises you may need for nearby pay grades.

Where this usually goes wrong

Forgetting wage compression. Raising new hires to a new minimum can leave long-tenured staff earning almost the same; check the gap between levels.
Budgeting the raise at 2,080 hours for staff who regularly work overtime. Use their real paid hours, including overtime.
Announcing a percentage without the dollar figure. Show employees the new hourly rate so there is no confusion on the first paycheck.

Variations for different teams

Hourly retail teamsModel a flat cents-per-hour raise against a percentage to see which keeps your entry rate competitive.

Unionized workplacesEnter the step increase from the contract and add any general increase on top.

Pro tipPut the effective date at the start of a pay period. Mid-period raises force split calculations and are a common source of paycheck errors.

What people ask about the pay raise calculator

Does a raise change overtime pay?

Yes. Overtime is based on the regular rate, which rises with the raise.

Should I raise by percent or dollars?

Percent keeps differences between roles. A flat dollar raise helps lower-paid staff more. Both are common.

What about minimum wage increases?

If the minimum rises in your area, rates below it must be raised. Check local rules.

Is this for salaried staff?

Yes. Enter the hourly equivalent or use the hourly to salary calculator first.

How do I budget a raise for part-time employees?

Enter their expected paid hours instead of 2,080, for example 1,560 for someone averaging 30 hours a week. The extra yearly cost then matches what you will actually pay rather than a full-time figure.

What does a raise really cost the employer?

More than the wage increase alone. Employer payroll taxes and workers’ comp premiums are figured on wages, so they rise with the raise, and every overtime hour costs 1.5 times the increase. Apply your burden rate to the extra wages figure when budgeting.

More for the same job

Keep reading

Skip the manual totals

Instead of adding up timesheets before you open the pay raise calculator, let EZTime total employee hours. Book a demo to see it with your team.

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General information and an estimate only. It is not legal, payroll, tax or financial advice. Rules vary by state and city. Check important results with a qualified professional.