Cost of Living Raise Calculator
Compare your raise with inflation. See what it is really worth in purchasing power, and the raise you would need just to stand still.
Compare another percentage, dollar increase or new salary with the pay raise calculator.
Your raise minus inflation
A raise has two numbers. The one on the letter is nominal — how many more dollars you get. The one that matters is real — how much more those dollars buy. Subtracting inflation is close enough for a rough answer, but the correct formula divides:
Real raise % = ((1 + raise ÷ 100) ÷ (1 + inflation ÷ 100) − 1) × 100
With CPI at 3.4% over the 12 months ending August 2026, a 3% raise works out at −0.39% in real terms. You are earning more dollars and buying slightly less with them. A 5% raise is +1.55% — a genuine gain, though a modest one.
What your raise is really worth
| Nominal raise | Real raise | Verdict |
|---|---|---|
| 0% | −3.29% | Real pay cut |
| 1% | −2.32% | Real pay cut |
| 2% | −1.35% | Real pay cut |
| 2.5% | −0.87% | Real pay cut |
| 3% | −0.39% | Real pay cut |
| 3.5% | +0.10% | Roughly break-even |
| 4% | +0.58% | Real gain |
| 5% | +1.55% | Real gain |
| 6% | +2.51% | Real gain |
The COLA you need to break even
To keep the same purchasing power you need a raise equal to inflation — 3.4% right now. In dollars that is:
| Current salary | Break-even raise | New salary | Per bi-weekly paycheck |
|---|---|---|---|
| $40,000 | $1,360 | $41,360 | $52.31 |
| $55,000 | $1,870.00 | $56,870 | $71.92 |
| $70,000 | $2,380 | $72,380 | $91.54 |
| $90,000 | $3,060 | $93,060 | $117.69 |
| $120,000 | $4,080.00 | $124,080 | $156.92 |
A raise below the chosen inflation rate reduces the purchasing power of that pay under this comparison. It does not describe every part of your household finances: hours, other income, taxes, benefits and personal spending can also change.
CPI, core CPI and your own inflation rate
Headline CPI includes food and energy; core CPI excludes them to help track underlying price movements. Neither is an exact measure of your household expenses. Match the inflation period to your pay comparison and enter a different assumption when appropriate. See the BLS CPI release.
Your personal inflation rate depends on your spending and price changes. Housing, transport, childcare and insurance can differ from the national average. Use your own consistent spending comparison when the national index does not fit your situation.
Using this in a pay conversation
Cost-of-living arguments work best when they are specific and separate. Bring one number for inflation since your last increase, one for what that costs you in dollars, and one for the merit increase you are asking for on top. Merging them into a single demand invites the employer to treat your performance raise as inflation cover — which is exactly how a 3% "raise" becomes a real-terms freeze.
It also helps to know the market rate for your role, not just the price index. Inflation explains why your pay should not fall; market data explains why it should rise. See how to ask for a raise and raise vs inflation.
Cost of living raise FAQ
What is a cost of living raise?
A cost-of-living adjustment (COLA) is intended to respond to changes in prices. A policy may use a particular CPI series, measurement period, cap or formula. Under a simple comparison with 3.4% inflation, a 3.4% raise preserves the purchasing power of that pay; this does not establish an employer obligation or describe every household expense.
How do I calculate a cost of living raise?
Multiply your salary by the inflation rate. At 3.4% CPI, a $60,000 salary needs $2,040 just to break even. The formula for what a raise is really worth is ((1 + raise) ÷ (1 + inflation) − 1) × 100.
Is a cost of living raise the same as a merit raise?
No, and it is worth separating them when you negotiate. A COLA restores the value of your existing pay; a merit raise pays you more for being worth more. Employers often merge the two into one number, which quietly turns your performance increase into inflation cover.
Do employers have to give cost of living raises?
Eligibility for a cost-of-living adjustment depends on your employment agreement, applicable law and any collective agreement. Check the rules covering your role; this calculator does not determine an entitlement.
What inflation rate should I use?
Headline CPI includes food and energy; core CPI excludes them to help track underlying price movements. Neither is an exact measure of your household expenses. Match the inflation period to your pay comparison and enter a different assumption when appropriate. See the BLS CPI release.
My raise was below inflation. What should I do?
Say it in those terms. "This is a 2% increase against 3.4% inflation, so it is a real-terms reduction" is a factual, unemotional argument, and it moves the conversation from what feels fair to what is measurable. If the budget is genuinely fixed, ask for the gap in a form that is not salary: a title change, a review date in six months, or an equity or bonus adjustment.
Related calculators
- Pay Raise CalculatorNew salary, per paycheck, take-home and real raise.
- Hourly Raise CalculatorTurn a $/hour raise into weekly, monthly and annual pay.
- Raise After TaxesHow much of your raise you actually keep.
- Salary Increase Over TimeCompound annual raises over 5, 10 or 20 years.
Inflation: US Bureau of Labor Statistics, CPI Summary — CPI-U, all items, not seasonally adjusted, 12 months ending August 2026, released 2026-09-11.