Did your pay rise beat inflation?
A raise only counts if it outpaces prices. See your pay in real terms — and what actually lands in your account — or flip to bonus mode for the tax on a lump sum.
ABS CPI, year to May 2026
Your +5.1% pay rise
beat inflation — in real terms you're +1.0% better off
At 4.0% inflation, your new $89,300 is worth $85,865 in last year's money — $900 more purchasing power than simply keeping pace.
+5.1%
+1.0%
+$900
$85,865
What actually lands in your account
$67,280
$70,204
+$2,924
Of your $4,300 gross rise you actually keep $2,924 after tax — tax and levies take $1,376 (32% of the rise, at a 30% marginal rate).
Real-wage maths deflate your new pay by CPI. Take-home compares resident tax + 2% Medicare levy on each salary (single, with hospital cover). Inflation: ABS — Consumer Price Index, Australia (year to May 2026) — editable above. A guide, not financial advice.
Wage growth and price growth are separate numbers, and only the gap between them changes what you can buy. This page turns a nominal raise into a real one: what your new salary is worth in last year's money, the purchasing power you gained or lost, and how much survives tax.
The second mode covers the other pay conversation — a bonus. Because a lump sum stacks on top of income you have already earned, it is taxed from where your income already sits rather than from the tax-free threshold, which is why bonuses arrive smaller than expected.
How this is calculated
- 1
Work out the nominal rise
Your new pay is divided by your old pay to give the headline percentage increase — the figure most people quote, which on its own says nothing about whether you are better off.
- 2
Deflate the new pay by inflation
The new salary is divided by one plus the inflation rate, restating it in last year's dollars; the real rise is that same adjustment applied to the percentage. The inflation field defaults to ABS CPI of 4.0% for the year to May 2026 and is editable.
- 3
Convert the gap into dollars
Your old pay is grown by the inflation rate to give the salary that would have kept you level; the difference from your new pay is the purchasing power gained or lost. Break-even is a raise equal to inflation, and the advanced table sweeps a range around it.
- 4
Run both salaries through the tax scale
Old and new pay are each taxed on the 2026-27 resident rates plus the 2% Medicare levy. The difference in net pay is what the raise is worth in your account; the rest is the tax and levy on the rise.
- 5
Tax the bonus as the top slice of your income
Bonus mode taxes your salary alone, then your salary plus the bonus, and treats the difference as the tax on the bonus. The advanced section splits that across the brackets the bonus passes through and shows the Medicare levy separately.
What it assumes
- One inflation rate is applied to everything you buy. Your own rate depends on your spending mix — rent, mortgage interest and groceries all move differently from the headline index.
- Salary is treated as gross taxable income. Employer super is neither added nor deducted, and no deductions, offsets or investment income are modelled.
- The take-home figures assume a single person with private hospital cover, no study loan and no salary sacrifice. If any of those apply you keep less of the raise than shown.
- Bonus mode shows the full-year tax on the bonus, not your employer's withholding.
- The ten-year projection holds your pay flat and inflation constant — a what-if showing how a frozen salary erodes, not a forecast.
Common questions
What raise do I need just to stand still?
Before tax, one that matches the inflation rate exactly. After tax it is a little more, because the extra dollars are taxed at your marginal rate. Anything below inflation is a real pay cut, even though your payslip went up.
Why was so much taken out of my bonus?
A bonus sits on top of income you have already earned, so none of it is sheltered by the tax-free threshold or the lower brackets. Employers also withhold from lump sums using separate ATO schedules, which can take more or less than the final amount — the difference squares up in your return.
Which inflation figure should I use?
The default is the ABS monthly CPI indicator. The quarterly CPI release is the longer-standing series and can differ for the same period, and some people prefer the trimmed mean, which strips out volatile price movements. The field is editable.
Is a pay rise better than a bonus of the same size?
Usually. A raise lifts every future pay period and becomes the base your next raise is worked out from, while a bonus is a single payment that need not be repeated.
My pay keeps rising but I feel no better off. Why?
Two things compound. A below-inflation raise leaves you behind on its own, and Australian tax thresholds are not automatically indexed, so raises that merely track inflation push more of your income into higher brackets — bracket creep.
Sources: ABS — Consumer Price Index, Australia · ATO — tax rates for Australian residents · All data sources
See also: Take-home pay · Where do you rank? · Salary sacrifice · Budget your salary
General information only, not financial advice. Figures are estimates based on the inputs and assumptions above and don't account for your personal circumstances. Confirm anything important with the relevant authority or a licensed adviser.