More than a percentage
A 3.5% rise sounds simple, but what matters day to day is how much more you keep after tax. Because the extra dollars are taxed at your marginal rate, the take-home increase is always smaller than the headline rise. This calculator shows both.
How to use it
- Enter your current annual salary, excluding super.
- Choose whether you know the percentage increase or the new salary, and enter it.
- Read the rise in percent and dollars, and the extra take-home per year and per fortnight.
The formulas
Percentage rise = (new salary − old salary) ÷ old salary × 100. New salary from a percentage = old salary × (1 + percentage ÷ 100). Extra take-home = take-home at the new salary − take-home at the old salary, using the selected year's resident tax rates, LITO and the Medicare levy.
Worked example
A 3.5% rise on $85,000 takes your salary to $87,975, an increase of $2,975 before tax. Because that extra income falls in the 30% bracket and attracts the 2% Medicare levy, you keep $2,023 of it — about $77.81 more each fortnight.
Is your rise keeping up?
To know whether a rise improves your real income, compare it with inflation over the same period. The Australian Bureau of Statistics publishes the Consumer Price Index each quarter and the Wage Price Index, which tracks typical pay growth. A rise below CPI means your pay buys less than before.
Award and minimum wage increases
If you're paid under a modern award, the Fair Work Commission's Annual Wage Review usually lifts minimum rates from the first full pay period on or after 1 July. Employers paying above the award don't always have to pass the increase on, depending on your contract. Enterprise agreements set their own increase dates.
Super goes up too
Your employer's 12% super guarantee is calculated on your earnings, so a rise also increases your super. On a $2,975 rise that's roughly another 12% of the increase into your fund each year — not shown in take-home but part of your total package.
Negotiating a rise
Salary conversations go better with numbers. Use this result together with the take-home pay calculator to frame the increase you need in after-tax terms, and the pro-rata calculator if you're considering fewer hours instead.
Finally, remember that a percentage rise compounds. Two consecutive 3.5% rises lift a salary by 7.12%, not 7%, because the second rise applies to the already-increased figure. Run the calculator twice, using the first result as the new starting salary, to see the effect over several years.
Comparing two job offers
When comparing a new role with your current one, enter your current salary as "before" and the offer as "after". The result shows the true increase in take-home pay. Then consider what the headline number leaves out: super above 12%, salary packaging, bonus structure, flexible work, travel time and leave entitlements. A smaller rise with better conditions can be worth more.
Rises that cross a bracket
If a rise takes your income past $135,000, the dollars above that point are taxed at 37% plus Medicare levy, so you keep 61 cents of each. If it takes you past $129,717 and you have a study loan, the repayment rate on dollars above that point rises from 15% to 17%. Tick the year and check the result rather than assuming a flat rate.
Rises and other payments
A higher salary can affect amounts that depend on income, such as study loan repayments, the Medicare levy surcharge for people without private hospital cover, and some government payments and concessions. If any of these apply to you, check them after you've worked out the new salary, as they can reduce the extra take-home slightly.
Frequently asked questions
How do I calculate a percentage pay rise?
Subtract your old salary from the new one, divide by the old salary and multiply by 100.
How much is a 3% pay rise on $80,000?
$2,400 before tax, taking the salary to $82,400.
Why is my take-home increase smaller than the rise?
The extra income is taxed at your marginal rate plus the Medicare levy, so you keep about 68% of a rise in the 30% bracket.
When do award wages increase?
Usually from the first full pay period on or after 1 July, following the Fair Work Commission's Annual Wage Review.
Does a pay rise increase my super?
Yes. Employer super is 12% of your qualifying earnings, so it rises with your pay.
