Why not just subtract inflation from the raise?

Because both are ratios, not amounts. A 3% raise against 3.5% inflation leaves you with 1.03 / 1.035 = 0.99517 of your old buying power, which is a 0.48% cut rather than 0.5%. The gap is small at these numbers and gets wide fast: a 10% raise against 8% inflation is worth 1.85%, not 2%.

What raise keeps me level?

Exactly the inflation rate over the same period. Anything under it is a pay cut in real terms no matter how the number on the payslip moved, and this is why nominal raises and inflation-adjusted wages can point in opposite directions in the same BLS release.

Which inflation number should I use?

CPI-U over the twelve months your raise covers, from the BLS release. Use the same period for both figures: pairing a raise granted in June with a CPI reading from a different month mixes two reference periods and shifts the answer.

Does this account for tax?

No. It compares gross pay with gross pay. A raise that moves part of your income into a higher bracket is still a raise on every dollar below the threshold, because US federal brackets are marginal, but your take-home rise will be smaller than the gross figure here.

Pay Raise Calculator

With current pay 68000 usd, raise 3 %, inflation over the same year 3.5 %, pay raise comes to -0.48 % — raise after inflation. It is reached in 9 steps, the last of which is ((1 + 3 / 100) / (1 + 3.5 / 100) - 1) * 100, and each one is printed on the page with its numbers filled in. The formula is the one published by US Bureau of Labor Statistics, not an approximation fitted to it.

What a raise adds per period and per year, and what it is worth after inflation has taken its share.

Formula and sources checked 17 August 2026 · How we check

Paid Per year, Current pay 68000, Raise 3, Inflation over the same year 3.5

-0.48 %

Raise after inflation for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.

It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.

PaidCurrent payusdThe figure for the period selected above.Raise%Inflation over the same year%Put in the current CPI-U figure for the twelve months your raise covers.

Raise after inflation

-0.48 %

Raise per pay period: 68000 * 3 / 1002,040
New pay per period: 68000 + 204070,040
Current pay per year: 68000 * 168,000
New pay per year: 68000 * (1 + 3 / 100)70,040
Raise per year: 70040 - 680002,040
Raise after inflation: ((1 + 3 / 100) / (1 + 3.5 / 100) - 1) * 100-0.483 %
New yearly pay in current dollars: 70040 / (1 + 3.5 / 100)67,671.498
Yearly buying power gained or lost: 67671.498 - 68000-328.502
Raise needed just to stand still: 3.5 %

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Worked example

A 3% raise on $68,000 is $2,040 more a year. Against 3.5% inflation it is a real cut of 0.48%, and the new salary buys about $329 less than the old one did. Standing still would have taken 3.5%.

How to work it out yourself

1.Enter your pay for whichever period your payslip uses. The yearly figures are worked out from it.
2.Enter the raise as a percentage. If you were given a dollar figure instead, divide it by your current pay and multiply by 100.
3.Put in the inflation figure for the twelve months the raise covers. The BLS release linked below carries the current CPI-U number.
4.Read the real raise. Above zero, you gained ground; below zero, the raise did not cover the rise in prices even though the number on the payslip went up.

The formula

Raise per pay period68000 * 3 / 100
New pay per period68000 + 2040
Current pay per year68000 * 1
New pay per year68000 * (1 + 3 / 100)
Raise per year70040 - 68000
Raise after inflation((1 + 3 / 100) / (1 + 3.5 / 100) - 1) * 100
New yearly pay in current dollars70040 / (1 + 3.5 / 100)
Yearly buying power gained or lost67671.498 - 68000
Raise needed just to stand still

Source: US Bureau of Labor Statistics — Employment Cost Index news release (wages and salaries, nominal and inflation-adjusted), US Bureau of Labor Statistics — Consumer Price Index news release archive (CPI-U, twelve-month change)

Questions people actually ask

Why not just subtract inflation from the raise?: Because both are ratios, not amounts. A 3% raise against 3.5% inflation leaves you with 1.03 / 1.035 = 0.99517 of your old buying power, which is a 0.48% cut rather than 0.5%. The gap is small at these numbers and gets wide fast: a 10% raise against 8% inflation is worth 1.85%, not 2%.
What raise keeps me level?: Exactly the inflation rate over the same period. Anything under it is a pay cut in real terms no matter how the number on the payslip moved, and this is why nominal raises and inflation-adjusted wages can point in opposite directions in the same BLS release.
Which inflation number should I use?: CPI-U over the twelve months your raise covers, from the BLS release. Use the same period for both figures: pairing a raise granted in June with a CPI reading from a different month mixes two reference periods and shifts the answer.
Does this account for tax?: No. It compares gross pay with gross pay. A raise that moves part of your income into a higher bracket is still a raise on every dollar below the threshold, because US federal brackets are marginal, but your take-home rise will be smaller than the gross figure here.

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