What Is a Good Annual Raise? Average Raise Percentage Explained

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An average raise in the U.S. currently runs about 3% to 3.5% of base salary per year. Several large compensation surveys put the median or average annual pay increase at 3.5% for 2025, and employers project the same figure for 2026. Against that benchmark, a 3% raise is roughly normal, 4% to 5% is solidly above average, and anything near 10% usually comes from a promotion, a job change or an unusually strong case built on performance data. Whether a given raise is “good” also depends on inflation, your field, your location and how your pay compares with the market for your role.

What the Average Raise Is Right Now

Three widely followed compensation surveys landed on almost the same number. Willis Towers Watson’s salary budget planning research found that the median pay raise U.S. companies gave employees in 2025 was 3.5%, and it projects 3.5% again for 2026. PayScale’s research also showed employers planning increases of 3.5%, with a shift toward across-the-board raises that differ little from one employee to the next. Mercer reported average actual increases of 3.5% in 2025 and projects the same for 2026.

Willis Towers Watson attributed the higher raises of recent years to tight labor markets, inflation and worries about retaining employees after the pandemic. It expects salaries to stabilize, with bonuses and individual performance playing a bigger role in pay decisions.

Total increase vs. merit increase. Mercer separates the overall salary increase budget from merit increases. In 2025, merit increases averaged nearly 3.2% while total increases averaged 3.5%. For 2026, Mercer projects 3.1% for merit and 3.5% in total. The gap covers promotions, market adjustments and other increases outside the regular merit cycle. If your raise was purely a merit increase, 3.1% to 3.2% is the closer comparison.

A budget is not a guarantee. A 3.5% salary budget is a pool of money. A company with that budget might give one employee 6% and another 1% and still average 3.5%. Being below the average doesn’t necessarily mean you were singled out, and matching it doesn’t mean you were rated a top performer. If you want to know where you stand, ask how raises are distributed at your company and what rating your increase reflects.

Government data tells a similar story from another angle. The Bureau of Labor Statistics (BLS) Employment Cost Index showed wages and salaries for civilian workers rising 3.3% from December 2024 to December 2025. That measures how employer pay costs changed overall, not the raise any individual received.

Is Your Raise Good? A Quick Scale

Using the roughly 3.5% benchmark, here is how common raise sizes compare. The scale assumes a raise to base salary over one year in a period of moderate inflation.

• 1% to 2.5%: Below average. In most recent years this would trail inflation, meaning your real pay fell.
• 3% to 3.5%: In line with average. A 3% raise is normal but not generous; it keeps you roughly level with the market.
• 4% to 5%: Above average, and a reasonable result for a strong performance rating.
• 6% to 8%: Well above a standard annual increase. This size often comes with expanded responsibility, a market adjustment or a retention effort.
• 10% and up: Uncommon within a regular review cycle. A 10%, 12% or 13% raise in one year usually reflects a promotion, a correction after being underpaid, or a competing offer.

Raises spread over several years should be converted to an annual rate before you compare them. A 7% raise after two years without one works out to about 3.4% per year (1.07 raised to the power of 0.5). That is roughly in line with the average annual increase, so it doesn’t show the premium a top performer might hope for, even though 7% sounds large.

Turning a Raise Into Dollars

Hourly raises

To find what a $1 hourly raise is worth per year, multiply by your annual hours. At 40 hours a week for 52 weeks, that is 2,080 hours, so a $1 raise adds $2,080 a year before taxes. At 25 hours a week, it adds $1,300. As a percentage, a $1 raise is 5% for someone earning $20 an hour and 4% for someone earning $25.

Flat-dollar raises

To turn a dollar raise into a percentage, divide the raise by your old salary. Someone making $70,000 who gets a $5,000 raise received about 7.1% ($5,000 ÷ $70,000). That is about twice the current average, so yes, it is a good raise by survey standards. The same $5,000 on a $120,000 salary is about 4.2%: still above average, but less striking.

Raises over several years

A cumulative increase needs both the starting salary and the time period to judge. Suppose your salary is $13,000 higher than it was five years ago:

• Starting at $50,000, that is a 26% total increase, or about 4.7% per year compounded. That beats the current average.
• Starting at $100,000, it is 13% in total, or about 2.5% per year. That trails the average and, in most recent years, inflation too.

The formula is: annual rate = (new salary ÷ old salary) raised to the power of (1 ÷ number of years), minus 1.

What it does to your paycheck

On a $60,000 salary, a 3.5% raise adds $2,100 a year, which is about $175 per month or $81 per biweekly paycheck before taxes and deductions. Your take-home increase will be smaller after federal and state income tax, payroll taxes and any percentage-based contributions such as a 401(k) deferral.

Does Your Raise Keep Up With Inflation?

The real raise is what remains after inflation:

Real raise = (1 + nominal raise) ÷ (1 + inflation rate) − 1

With a hypothetical 3.5% raise and 3% inflation, the real raise is 1.035 ÷ 1.03 − 1, or about 0.5%. Your purchasing power barely moved.

The period around 2021 shows how this can turn negative. In December 2021, the Consumer Price Index (CPI) was up 7% from a year earlier, and 5.5% excluding food and energy. A worker who received a 3% raise that year saw a real change of about −3.7% (1.03 ÷ 1.07 − 1). On paper they earned more. In practice they could afford less.

To keep up with inflation, your raise needs to at least match the annual CPI change for the period; to get ahead, it must exceed it. You can compare your raise history with the U.S. inflation rate by year.

Wages respond to inflation slowly. Salaries are set annually, budgets are planned in advance, and employers weigh profitability, the labor market and the going rate for each role, not just the cost of living. As a result, real income tends to fall during inflationary stretches before pay catches up, if it does. Some employers give explicit cost-of-living adjustments (COLAs), separate from merit raises, but that is company or contract policy, not a general rule.

Why Small Differences Compound

Each raise is applied to a base that already includes every previous raise, so differences that look minor in one year grow large over a career. This is the same mechanism as compound interest.

Take a hypothetical $60,000 starting salary over 10 years with no promotions:

• At 3% per year, it grows to about $80,600.
• At 5% per year, it grows to about $97,700.

That two-point difference leaves the second worker earning roughly $17,000 more per year by year 10, and the gap keeps widening. It also affects anything calculated as a percentage of salary, including retirement contributions, employer matches and future raises, so even an extra percentage point is worth negotiating.

What Determines the Size of Your Raise

Location

Pay levels and pay growth vary by region because local labor markets differ. BLS data for December 2024 to December 2025 showed wages and salaries rising 3.3% nationally, but metro areas diverged:

• Chicago: 4.8%
• Seattle: 3.6%
• Los Angeles: 3.2%
• Detroit: 3.1%
• San Jose: 2.6%

These are changes in what employers in each area paid overall, not what an individual employee will receive, but they show the regional backdrop can sit a point or more above or below the national number.

Sector

The broad split between private and public employers made little difference in the same BLS period. Wages and salaries rose:

• 3.3% for all civilian workers
• 3.3% for private industry workers
• 3.4% for state and local government workers

Differences can be larger within specific industries and occupations, especially where demand for certain skills is high, so salary data for your occupation and region is more useful than a national average.

Performance: merit increases

Pay increases tied to how well you do your job are called merit increases. Many employers handle them through an annual review cycle, where your performance rating determines your share of the merit budget. They are designed to reward results and encourage people to stay. Against Mercer’s figures, a merit increase of about 3.1% to 3.2% is average, so a 3.5% merit increase is slightly above the norm.

To understand how merit pay works at your company, ask HR how ratings translate into raise ranges, or check your employee handbook or contract.

Tenure and pay range

Time on the job helps because it gives you a track record. Many employers review pay on an annual cycle, so your first raise often comes after about a year. Tenure can also work against you. Companies typically set a salary range for each role and grant annual increases within a fairly narrow band. Once you are near the top of your range, further raises can shrink unless you move into a higher-level role.

Bonuses and Other Forms of Compensation

Consider a hypothetical employee earning $80,000 who receives a 1% raise. That adds $800 to base pay, which would likely trail inflation. If the same employee also receives a $4,000 bonus, their total pay for the year rises 6%: 1% from the raise and 5% from the bonus.

The distinction is timing. The raise becomes part of your base and carries into every future year, and future raises are calculated on it. The bonus is paid once. Next year, unless another bonus arrives, total pay falls back to $80,800. If you rely heavily on bonuses, you may not keep pace with inflation over time unless the bonuses are large and consistent.

When a company says a raise isn’t possible, other items can still be worth negotiating:

• Measurable performance bonuses with clear targets
• More paid vacation
• Higher employer contributions to health insurance
• Child care subsidies
• Retirement contributions or a larger match
• Paid training, certifications or career development programs

Development opportunities don’t add to your bank balance right away, but they can raise your earning power in your next role, whether at the same employer or a new one.

When to Ask for a Raise

The performance review is the natural time to discuss pay, because that is when managers are already evaluating your work and allocating the raise budget. Many companies hold reviews at the end of the year. Raising the topic a month or two before the review can help, since budgets are often set before the meeting.

You don’t have to wait for the review if you have taken on significant new responsibilities or delivered a notable result. Asking soon after a clear win puts the evidence in front of your manager while it is fresh.

If you are new, give yourself at least six months to build a track record. Your case is stronger after about a year, when you can point to a full cycle of results.

A competing offer is another trigger. If you have one and would actually consider taking it, you can tell your employer you are thinking about leaving. An employer that wants to keep you may match or approach the offer, since that can cost less than hiring and training a replacement. Only use this approach if you are prepared to leave.

How to Ask for a Raise

Do your research

Gather concrete numbers on what people in your role, at your level and in your area earn elsewhere, using job postings that list salary ranges, salary surveys and occupational wage data. Co-workers willing to share their pay can reveal whether you are paid less for similar work. Market data turns a request from “I would like more” into “my pay is below the going rate for this role.”

Show your worth

List what you have accomplished over the past six months, the past year and since you started. Then connect each item to something the employer cares about: revenue, clients, costs, retention or the team’s goals. Use numbers wherever you can, such as new clients signed, sales growth, hours saved or error rates reduced.

Have a plan for the future

Your reasons for wanting more money, whether rent, savings or a child’s education, are real. But the employer will be weighing what it gets in return. Lay out what you plan to take on in the coming year, building on what you have already delivered, and explain how it benefits the team or company. This shows that the raise pays for future value, not just past work.

Put it in writing

Your manager often cannot approve a raise alone and may need to take the request to their own manager or to HR. Bring a short written summary to the meeting that includes:

• Your current salary and how it compares with market data
• Your key accomplishments, with numbers
• Your goals for the next year and their expected benefit
• The raise you are requesting

How Job Switching Affects Your Pay

Changing employers has long been the most reliable route to a large pay jump. Increases of 10% to 20%, sometimes more, are commonly cited for job changes. That is not guaranteed and depends on the market for your skills, but it is far above a typical annual raise.

The reason is structural. Inside a company, your increases are usually calculated as a percentage of your current pay and limited by the salary range for your role. A new employer is not bound by your old salary history or your old range. It is pricing the role, and you, at the current market rate. Even so, you still have to show you are worth the number you are asking for.

If annual raises at your current job consistently trail inflation or the market, and internal promotions aren’t available, testing the outside market is a practical way to find out what your skills are worth.

How Much of a Raise Should You Ask For?

There is no universal correct number, but a few anchors help. If you are paid close to market rate and had a solid year, asking for somewhat above the 3.5% average, perhaps 5% to 7%, is a reasonable starting point. If your research shows you are clearly underpaid, or you have taken on a larger role, asking for 10% to 20% above your current pay can be justified.

Start a little above the figure you would accept, since negotiation usually moves toward the middle, and lower your target if the employer pushes back. The stronger your documentation, the higher you can credibly start.

Is asking for a 10% raise too high?

A 10% raise is well above average but reasonable if you haven’t had a meaningful raise in a while, if market data shows your pay has fallen behind, or if your responsibilities have grown significantly. Expect to back it up with evidence of the value you have added and comparable salaries for your role.

FAQs

The Bottom Line

Workers judging a raise should check it against the roughly 3.5% average, adjust for inflation, and compare their pay with market data for their role and region. Small yearly gaps grow over a career because each raise builds on the last, and bonuses do not raise base pay. People whose raises keep trailing inflation should bring documented results to the review or test the outside market, where job changes often pay 10% to 20% more.