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How to Calculate Salary Change

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Calculating a change in your salary is a simple process that requires only a few simple mathematical operations. Ideally, you're getting an increase and you want to figure out how much extra cash you'll have. If you're getting a pay cut, then you'll need the information to figure out how much and where to cut back. Either way, it's valuable information that you can use to help better plan your budget.

Calculating Dollar Increase or Decrease

Salary changes are often reported to employees in terms of percentages; for example, "John, you've earned a 5 percent increase because of your good work." To determine the dollar change you'll be seeing, start by multiplying the percentage increase or decrease by your current, pretax salary. If you're using a calculator, enter your annual salary and multiply it by the percentage change you're getting. Percentages can be written in decimal form. Five percent is expressed as 0.05, while 12 percent is expressed as 0.12, for example. The result is the dollar amount that your salary is increasing or decreasing.

Calculate the new annual salary. If you're getting an increase, add the dollar increase you calculated to your current salary; this is the new annual salary. If you're getting a decrease, subtract the dollar decrease from your current salary.

To calculate your weekly, semimonthly or monthly pretax salary, divide the total dollar increase by 52 for weekly changes, 26 for semimonthly or 12 for monthly changes, respectively. This will represent the number of checks you receive per year. This is your pretax -- or gross -- salary. From this number, you must subtract taxes and other deductions, such as retirement contributions. For help determining these figures, contact your human resources representative. Each person will have different calculations, depending on their tax withholding, salary and other personal items.

Calculate Percentage Increase or Decrease

If your boss gave you a dollar amount increase, you'll start your calculation by subtracting the old salary from the new salary. If you're getting an increase, this dollar amount will be a positive number; if you're getting a decrease, it will be negative. Divide the dollar amount by the old salary. This will be a decimal number. If you're getting an increase, the decimal number will be positive; if a decrease, it will be negative.

Round the decimal number if the above result has 2 or more decimal places. To round the decimal, look at the number three places to the right of the decimal point. If the number is 5 or above, increase the number directly to its left by 1. For example, the decimal 0.125 is rounded to 0.13. Multiply the result by 100. This is the percentage increase or decrease.

If you earn an hourly rate, follow the same steps as above, substituting hourly rate for annual salary. When you have the new hourly rate, multiply that total by the number of hours you work in a week to determine weekly salary.


Lisa Bigelow is an independent writer with prior professional experience in the finance and fitness industries. She also writes a well-regarded political commentary column published in Fairfield, New Haven and Westchester counties in the New York City metro area.

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