How to use the salary inflation adjustment calculator
- Enter the earlier salary and choose how to measure inflation: a yearly rate or two price index values.
- For a yearly rate, enter the year of the salary, the year to adjust it to and the average inflation per year you want to use.
- For index values, enter the index in the earlier year and in the later year from the same series.
- Add your salary now if you want to compare. The tool shows what it equals in earlier-year dollars and the change in buying power.
Formula
Factor (rate) = (1 + rate)^years
Factor (index) = later index / earlier index
Adjusted salary = earlier salary x factor
Salary now in earlier dollars = salary now / factor
The price level change is factor - 1, shown as a percent.
A $60,000 salary ten years later
A $60,000 salary from 2016, adjusted to 2026 at an average 3% a year, uses a factor of 1.03^10 = 1.343916. That gives $80,634.98, so the same buying power takes $20,634.98 more.
If your salary now is $78,000, it equals $78,000 / 1.343916 = $58,039.33 in 2016 dollars, which is 3.27% below the earlier salary in buying power. Using index values of 240 and 322 instead gives a factor of 1.341667 and an adjusted salary of $80,500.00.
Rate or index values
A yearly rate is quick when you want to test a scenario, such as what a salary needs to be if prices rise 3% a year. Price index values are better for a real comparison, because a statistics agency has already combined thousands of prices into one series. Divide the later value by the earlier value and you have the exact factor between the two dates.
Use the same series for both values, and pick one that matches your question, such as a consumer price index for the area or for all items. The numbers in the fields are examples, so replace them. The inflation calculator is a good partner for general price changes.
What the answer does and does not mean
A salary adjusted for inflation tells you what pay would keep the same average purchasing power. It does not say what you should earn, because your costs may have risen faster or slower than the average, and your tax situation, benefits and role may have changed. Treat it as a way to see whether raises kept up.
If you are planning a raise request, combine it with the pay raise calculator to turn the target into a percent, and keep in mind that real growth over time also comes from promotions and market pay, not only from matching prices.
Assumptions and limits
- The inflation rate or index values are numbers you enter. The tool does not look anything up.
- A single average rate is applied every year. Real inflation varies from year to year.
- The result compares average prices and does not reflect your own spending, local prices, taxes or benefits.
- Years must be whole numbers, the later year cannot be before the earlier year, and the span is limited to 150 years.
Frequently asked questions
How do I adjust a salary for inflation?
Multiply the earlier salary by the change in the price level between the two dates. With a yearly rate that factor is (1 + rate) raised to the number of years. With index values it is the later index divided by the earlier one.
Which inflation number should I use?
Use a figure from a source you trust, for the same dates as your salary, and use the same series for both index values. The example numbers on this page are only samples.
Does this tell me if I am paid fairly?
No. It only shows whether your pay has kept the same buying power as an earlier salary. Fair pay also depends on your role, skills, market rates and location.
What does a negative buying power change mean?
It means your current salary buys less than the earlier salary did, measured with the inflation you entered. A positive number means it buys more.