How much is a raise worth after taxes?

Getting a raise is exciting — until your first paycheck arrives and the increase looks nothing like the number HR announced. A $7,500 raise on a $75,000 salary (10%) does not produce $7,500 of extra take-home pay. After federal income tax, Social Security, Medicare, and state income taxes, the real addition to your paycheck is substantially smaller. Understanding why — and what to do about it — is the point of this guide. Use the raise calculator to run your own numbers side by side.

Why your gross raise and your net raise are different numbers

The United States uses a progressive tax system: income is taxed in layers, and each layer (bracket) is taxed at a different rate.^[1] Your existing salary already occupies the lower brackets. A raise starts from where your current salary leaves off — meaning the first new dollar may already sit in a mid-range bracket rather than the 10% or 12% bands that applied to the first dollars you earned.

Consider a single filer earning $75,000 in 2026. The 22% federal bracket for single filers begins at $50,400 of taxable income. After the standard deduction, most of a $7,500 raise on that salary would be taxed at 22% federally — not at the lower rates that apply to earlier slices of income. On top of federal income tax, Social Security (6.2%) and Medicare (1.45%) apply to virtually all of the raise for typical wage earners under the Social Security wage base.^[3]

State income tax adds another layer. It varies from 0% in states with no wage income tax to 9% or more at the top of progressive schedules in high-tax states. Put together, a 10% gross raise often translates to roughly 5–7% more take-home pay for a typical middle-income earner in a moderate-tax state — still valuable, but a different planning number than the headline percentage on the offer letter.

The marginal rate vs. your effective rate

Your effective rate is total taxes paid divided by total gross income. It is almost always lower than your top bracket because of the progressive structure: dollars in the first brackets are taxed more lightly. Your marginal rate is the rate on the next dollar earned. That is the rate that applies to your raise.

The distinction matters because people often hear they are in “the 22% bracket” and assume their whole salary is taxed at 22%. It is not. But their raise is taxed near that marginal rate (plus FICA and state tax). The marginal rate is the cost of each raise dollar; the effective rate is the blended cost of all income combined.

Worked example for a $75,000 salary, single filer, 2026, with a $7,500 raise and a 5% state tax assumption: federal income tax on the raise is roughly $1,650 (near the 22% marginal rate), Social Security about $465 (6.2%), Medicare about $109 (1.45%), and state tax about $375 — roughly $2,599 in total taxes and about $4,901 in extra take-home. Your federal effective rate on the full salary might land closer to 12–13%, while the marginal federal rate on the raise is 22%. Run the same scenario in the raise calculator with your filing status, pre-tax deductions, and state rate for a tighter estimate.

What to do with a raise: the 401(k) decision

A raise is the easiest time to increase your 401(k) deferral because you have not adjusted your lifestyle to the higher income yet.^[4] Every dollar deferred into a traditional 401(k) reduces your federal (and often state) taxable income — at your marginal rate. At 22% federal plus 5% state, a $100 401(k) contribution costs you only about $73 in take-home pay.

Concrete scenario on a $7,500 raise. Option A: take it all in take-home (roughly $4,900 net after the taxes above). Option B: increase 401(k) contributions by $3,000 per year and take the rest in take-home (roughly $4,750 net, depending on how you model the shelter). Option B delivers substantially more retirement savings for only a small reduction in spendable pay — often on the order of $150 less take-home per year in this illustration, while locking in $3,000 of pre-tax savings. Model contribution rates with the 401(k) contribution calculator.

For 2026, the employee deferral limit is $24,500($32,500 with the standard $8,000 catch-up for age 50+).^[4] A raise is a natural opportunity to close the gap between what you contribute today and those ceilings. If you are near the 24% bracket threshold, increasing pre-tax deferrals can also keep more taxable income in the 22% band — reducing the effective marginal rate on the raise itself.

Update your W-4 after a significant raise

After a meaningful raise, your current W-4 withholding may no longer match your tax liability.^[5] Employers withhold using IRS tables and the elections on your Form W-4. If your raise pushes income into a new bracket or simply increases taxable wages enough that prior elections under-withhold, you could owe money at filing without an adjustment.

Use the IRS Tax Withholding Estimator or the W-4 withholding calculator to check.^[2] Situations that often require a W-4 update include a large raise (greater than about 10%), a switch from part-time to full-time, adding a second job, or a change in filing status. The fix is usually simple: submit a new W-4 to HR or payroll with updated Step 3 credits or an additional withholding amount in Step 4(c). For a step-by-step walkthrough, see how to fill out your W-4.

State income taxes: how much they cut into a raise

Nine states have no broad-based wage income tax; others range from flat rates around 3% to progressive schedules topping 9% or more. State tax applies to the same incremental dollars as federal tax, so your total marginal rate is roughly federal marginal + FICA + state marginal. FICA alone is about 7.65% for most workers under the Social Security wage base (6.2% Social Security plus 1.45% Medicare).^[3]

Quick reference: a $5,000 raise at a 22% federal marginal rate faces roughly 22% + 7.65% (FICA) + your state rate. In a high-tax state with an approximate 9.3% marginal rate, the total marginal bite can approach 39%. In a 0% income-tax state, it is closer to 30%. The same gross raise therefore buys meaningfully more take-home in a low-tax state — useful context when comparing offers across locations or negotiating remote work location terms.

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