A raise percentage is the increase divided by what you earn now. Written out, the formula is:
The formula
Raise percentage = (new pay minus current pay) divided by current pay, multiplied by 100
Both figures have to cover the same period. Compare a yearly salary with a yearly salary, or an hourly rate with an hourly rate, never one against the other.
Worked example
Take someone on $85,000 who is offered $88,400. The increase is $3,400. Divide 3,400 by 85,000 and you get 0.04, and multiplying by 100 gives a 4 percent raise. To run it the other way, multiply your current pay by 1 plus the percentage as a decimal: 85,000 times 1.04 is 88,400.
That is the whole calculation, and it is worth doing by hand once so you can sanity check any number an employer gives you. The calculator above then handles the parts people actually get wrong: converting between hourly, weekly, biweekly, monthly and yearly pay, and working out the difference per paycheck rather than per year.
For scale, the national median wage across all US occupations in the federal data behind our career pages is $50,980 a year. A 4 percent raise on that figure is about $2,039 a year, or roughly $78.43 in each biweekly paycheck before tax.