Promotion or New Job? What a 5%, 10% or 20% Raise Is Really Worth
Career growth usually shows up in pay in one of three ways: steady annual raises where you are, a promotion that comes with a bigger step, or a move to another employer. People often compare these by their headline percentages. The percentages hide two things that matter a great deal: what each step is worth per paycheck, and how each one compounds over the following years. This guide uses the Pay Raise Calculator to put all three on the same footing.
Every figure below is an illustration on a $70,000 salary paid every two weeks. None of it is a forecast of what you will be offered; employers differ widely, and no calculation guarantees a raise or an offer.
What a single raise is worth
In percent mode, the calculator turns a raise into dollars per year, per month and per paycheck:
| Raise | New salary | Per year | Per month | Per paycheck (26) |
|---|---|---|---|---|
| 5% | $73,500.00 | $3,500.00 | $291.67 | $134.62 |
| 10% | $77,000.00 | $7,000.00 | $583.33 | $269.23 |
| 20% | $84,000.00 | $14,000.00 | $1,166.67 | $538.46 |
These are gross figures. Tax takes a share of each, and how big a share depends on where you live and your circumstances. The Take-Home Pay Calculator will estimate the net difference if you give it your own combined effective tax rate; it applies that one rate and does not model any country's or state's brackets or tax year, so treat the answer as a planning estimate rather than tax advice.
What a 10% raise looks like after tax
As an illustration only: at a combined effective rate of 24%, the Take-Home Pay Calculator puts net pay on $70,000 at $2,046.15 a paycheck and on $77,000 at $2,250.77, a difference of $204.62 a paycheck against a gross difference of $269.23. Your own rate will differ; read it off a recent pay stub, and if the two options are in different states or countries, find a rate for each from the relevant tax authority or a tax professional. In a progressive system the extra pay can be taxed at more than your average rate, which a flat-rate estimate does not show.
Staying put: what steady raises add up to
The calculator handles one raise at a time. To see several years, run each year from the previous year's new salary. Three annual 3% raises from $70,000:
| Year | Starting salary | 3% raise | New salary |
|---|---|---|---|
| 1 | $70,000.00 | $2,100.00 | $72,100.00 |
| 2 | $72,100.00 | $2,163.00 | $74,263.00 |
| 3 | $74,263.00 | $2,227.89 | $76,490.89 |
After three years you are $6,490.89 a year above where you started. Entering $76,490.89 as a target in the calculator shows that is a 9.27% total increase, a little more than 3 × 3% because each raise builds on the last. That compounding is the quiet strength of staying put: small steps that keep adding to each other.
Whether 3% a year is realistic for you depends on your employer, your performance and the wider economy. It is an example, not a typical figure.
A one-off jump: the same three years
Now compare a single 10% step in year one, from a promotion or a new job, followed by the same 3% a year after it. The salaries in each year:
| Year | Steady 3% raises | 5% promotion, then 3% | 10% job change, then 3% |
|---|---|---|---|
| 1 | $72,100.00 | $73,500.00 | $77,000.00 |
| 2 | $74,263.00 | $75,705.00 | $79,310.00 |
| 3 | $76,490.89 | $77,976.15 | $81,689.30 |
| Total over 3 years | $222,853.89 | $227,181.15 | $237,999.30 |
Over three years, the 10% move earns $15,145.41 more than steady raises, and by year three the salary gap is $5,198.41 a year. The 5% promotion earns $4,327.26 more over the period. Because later raises are percentages of a higher base, an early jump keeps paying, which is why the size of a step matters more than it first appears.
This assumes the person who moves also gets 3% a year afterwards. They might get more, less or nothing; a new employer's raise cycle may also start later. If you have better information, change the inputs.
The things a percentage leaves out
A 10% raise at a new employer is not automatically better than a 5% promotion where you are. Four things regularly change the answer.
Hours
If the bigger salary comes with longer hours, the hourly rate can fall. $70,000 at 40 hours a week is $33.65 an hour. $84,000 at 50 hours is $32.31 an hour, so a 20% raise that adds ten hours a week pays slightly less per hour than you earn now. $77,000 at 45 hours is $32.91. The Salary to Hourly Calculator shows this in seconds; our guide to your real hourly rate at 50 hours a week goes further.
Benefits, bonus and paid leave
A promotion often keeps benefits you have already earned, such as more paid leave from long service, a vested retirement match or a bonus scheme. A new employer may offer less of these. Here is an example in the Job Offer Comparison Calculator:
| Internal promotion | New employer | |
|---|---|---|
| Base salary | $73,500 | $77,000 |
| Target bonus | $3,000 | $0 |
| Employer retirement match | $2,940 | $2,310 |
| Benefits value | $6,500 | $5,000 |
| Paid days off | 22 | 15 |
| Value of paid days off | $6,219.23 | $4,442.31 |
| Total compensation | $92,159.23 | $88,752.31 |
The new job pays $3,500 more in base salary, but the promotion comes out ahead on total compensation in this example. Two notes on reading the table. The calculator values paid days off at your daily base rate (salary divided by 260 working days, times the days); that is a way of crediting extra paid time, not extra cash in your account. And a target bonus is not a guaranteed one, so it is worth running the comparison with the bonus at zero as well.
Risk
A new job comes with unknowns: probation periods, unfamiliar management, the chance that the role is not what was described. A promotion has its own risks, such as a harder job for not much more money. Neither shows up in a calculator, and both are real.
Where it leads
Sometimes the smaller step now leads to a bigger one later: a title that opens doors, skills that are scarce, a manager who will advocate for you. That is worth weighing, honestly, against the numbers above.
When the step is a pay cut
Occasionally the right move pays less: a change of field, a role with better hours, a job closer to home. Target mode shows exactly what you are giving up. Moving from $70,000 to $66,500 is a 5% cut: $3,500 a year, $291.67 a month, $134.62 a paycheck before tax. Seeing it per paycheck makes it easier to decide whether the trade is worth it, and to check that your budget can absorb it. If a shorter commute or fewer hours come with it, convert those too, because a lower salary for fewer hours can be a higher hourly rate.
A checklist for comparing your options
- Run each option's first-year salary through the Pay Raise Calculator in target mode to see the percentage and the per-paycheck change.
- Project three years for each by running the calculator once per year with a raise you consider realistic for that employer.
- Convert each to an hourly rate at the hours you expect to work.
- Compare whole packages, including bonus, match, benefits and leave, in the Job Offer Comparison Calculator. Run it again with any bonus at zero.
- Estimate net pay for the leading options with your own effective tax rate.
- Then weigh the parts no calculator can: risk, learning, the people, where it leads.
Common questions
Is it true that changing jobs always pays more than staying?
There is no rule that it always does. Some moves pay much more, some pay less once benefits and hours are counted, and some people do better by staying and being promoted. The only comparison that counts is the one between your actual options.
Should I tell my employer about an outside offer?
That is a personal decision with risks either way. If you do, be accurate about it. Our guide to comparing a counteroffer with a new job covers how to weigh the two if your employer responds.
What about raises above 100% or negative percentages?
The calculator handles cuts as negative raises, and a cut of more than 100% bottoms out at a salary of zero rather than going negative. Large raises work normally.
What the calculator does not cover
- It calculates one raise at a time; multi-year projections are you running it repeatedly, with your own assumptions.
- Its figures are gross and say nothing about tax.
- It does not know what any employer will pay. Every number in this guide is an example.
Put your real options into the Pay Raise Calculator, project them forward a few years, and compare the whole packages. The best-looking percentage is not always the best move, and the numbers will tell you when it is not.