Pay Raise Splitter
Split a raise among lifestyle, investing, and debt, after the marginal tax haircut, and see what each leg builds over 10, 20, and 30 years.
Your raise, after tax, per month
The gross raise minus the marginal tax haircut, divided by 12: the money there actually is to split.
$291.67
- Lifestyle leg
- $145.83
- Investing leg
- $87.50
- Debt leg
- $58.33
- Investing leg in 30 years
The investing leg's monthly amount compounding at your return for 30 years.
- $102,327.10
- Lifestyle leg's 30-year price tag
What the lifestyle share would build if invested instead. A price tag for an informed choice, not a judgment.
- $170,545.17
- Debt leg: interest avoided per year
Once a year of debt-leg payments has landed, the reduced balance stops accruing this much every year it would have persisted. Guaranteed at the APR.
- $154.00
- Unallocated share
100 minus your three shares. Negative means the shares overshoot 100 and each leg overstates.
- 0.00%
- Raise as a percent of salary
- 6.25%
What each leg builds
| Horizon | Investing leg | Lifestyle leg forgone | If both were invested |
|---|---|---|---|
| 10 years | $14,967.03 | $24,945.04 | $39,912.07 |
| 20 years | $44,409.43 | $74,015.72 | $118,425.15 |
| 30 years | $102,327.10 | $170,545.17 | $272,872.27 |
Quick answer: With the example inputs this page loads by default, the headline result (Your raise, after tax, per month) comes to $291.67. Split a raise among lifestyle, investing, and debt, after the marginal tax haircut, and see what each leg builds over 10, 20, and 30 years. Change any input above and every figure updates instantly in your browser.
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A raise is quoted gross but spent after tax, at your top marginal rate: a 5,000 dollar raise at a 30 percent combined marginal load is about 292 dollars a month, not 417. The save-half rule of thumb keeps 50 percent for your life today and points the rest at investing and debt. This calculator applies your split to the after-tax raise and prices each leg over 10, 20, and 30 years, with the debt leg's return honestly stated: it equals the APR, guaranteed.
What this result means
Three readings make the split useful rather than preachy. First, the after-tax figure is the real budget: planning around the gross number is how raises disappear. Second, the lifestyle leg's 30-year figure is a price tag, not a verdict; enjoying half your raise while take-home still rises is the design of the save-half rule, not a failure of it. Third, compare the debt leg's APR against the return assumption: paying a 22 percent card is a guaranteed 22 percent, which no market projection beats, so the sub-split between investing and debt should usually favor whichever rate is higher until the expensive debt is gone. The split you set here is worth keeping as a standing rule for every future raise; pre-committing raises is the mechanism behind the Save More Tomorrow result.
Assumptions
- The raise is taxed at the marginal rate you set before anything is split, because a raise stacks on top of existing income and is taxed at your highest combined rate (federal, state, and payroll). Set the rate to 0 to enter an after-tax raise directly. Dollars routed to a traditional 401(k) would escape today's income-tax slice of that haircut; this simple model does not net that out.
- The investing leg grows as end-of-month contributions at the exact monthly equivalent of the effective annual return you set, nominal, before taxes and fees, constant across the horizon. The lifestyle leg's price tag runs the identical math on the lifestyle share.
- The debt leg's return is the debt's APR, guaranteed while the balance persists: the steady-state figure is one year of debt-leg payments times the APR. It is not compounded over decades on purpose, because the debt (and therefore the guaranteed return) ends when the balance does, and projecting card-APR compounding for 30 years would overstate the leg.
- The three shares are applied exactly as entered; nothing is silently normalized. The unallocated output shows any gap (money you have not assigned) or overshoot (shares totaling more than 100, which makes each leg overstate).
- The 50/30/20 default is the save-half rule of thumb, not advice: roughly half of future raises saved is the level several published sources converge on (Of Dollars and Data's computed version, Vanguard's half-the-raise framing, and the Save More Tomorrow escalation research). The 30/20 sub-split between investing and debt is an editable starting point with no source of its own.
- One raise is modeled; salary growth, future raises, inflation, and employer match effects are not. This is an estimate for educational purposes only, not financial or tax advice.
Key terms
Definitions for the terms this calculator uses, in our finance glossary .
How it works
The raise is converted to after-tax dollars first: gross raise times (1 minus your marginal rate), divided by 12. The marginal rate is the right haircut because a raise stacks on top of your existing income and is taxed entirely at your highest combined federal, state, and payroll rate. Each leg is then a straight percentage of that after-tax monthly figure, applied exactly as entered; any gap or overshoot in the three shares surfaces as the unallocated output rather than being silently normalized.
The investing leg (and the lifestyle leg’s price tag) grow as end-of-month annuities at the exact monthly equivalent of the effective annual return, rm = (1 + r)^(1/12) - 1: future value = monthly x ((1 + rm)^months - 1) / rm. The debt leg is priced at its guaranteed return, the APR: after one year of redirected payments, the balance is lower by that year’s payments, so interest equal to those payments times the APR stops accruing every year the debt would have persisted. It is deliberately not compounded for decades, because the guaranteed return ends when the balance does.
Worked example
A $5,000 gross raise at a 30 percent marginal rate, split 50/30/20, at a 7 percent return and a 22 percent debt APR.
- After tax: 5,000 x 0.70 / 12 = $291.67 a month.
- Legs: lifestyle $145.83, investing $87.50, debt $58.33.
- Investing leg over 30 years: $102,327.10. Lifestyle leg’s price tag: $170,545.17.
- Debt leg: 58.33 x 12 x 22 percent = $154.00 of interest avoided per year the balance would have persisted.
What is included and excluded
One raise is modeled, once. Future raises, salary growth, inflation, employer match, and the tax advantage of routing the investing leg through a traditional 401(k) (which would escape the income-tax slice of the haircut today) are not modeled. The 50 percent lifestyle default is the save-half rule of thumb, converging across Of Dollars and Data’s computed version, Vanguard’s half-the-raise framing, and the Save More Tomorrow escalation research; the 30/20 sub-split is an editable starting point, not a sourced rule. This is an estimate for educational purposes, not financial or tax advice.
Sources
- Of Dollars and Data (Nick Maggiulli), the lifestyle creep guide and the save-half derivation
- Vanguard, how much should I be saving (half the raise while take-home still rises)
- Thaler and Benartzi, Save More Tomorrow (Journal of Political Economy, 2004)
- Federal Reserve, SHED 2024 report on income and expenses (spending outpacing income for a third year)
- IRS, federal income tax rates and brackets (marginal structure)
Frequently asked questions
- How much of a raise should you save?
- A widely cited rule of thumb is half. Nick Maggiulli's computed version lands near 50 percent of future raises for savers targeting a standard retirement multiple, Vanguard frames putting half a raise into your retirement plan while take-home still rises, and the Save More Tomorrow research showed pre-committing raises lifted saving rates from 3.5 to 13.6 percent.
- How much is a 5,000 dollar raise per month after taxes?
- At a 30 percent combined marginal rate, about 292 dollars a month. The raise is taxed at your top rate because it stacks on existing income, so the haircut is steeper than your average tax rate suggests. Only your marginal bracket changes what the raise nets, not whether the raise was worth getting.
- Should the extra money go to debt or investments?
- Compare the rates. Paying down a 22 percent card is a guaranteed 22 percent return, which beats any honest market assumption, so high-APR debt usually comes first. Once remaining debt costs less than your expected return, roughly 7 percent in this tool's default, the investing leg earns the larger share.
- Does a raise push you into a higher tax bracket and cost you money?
- No. US brackets are marginal: only the dollars inside a higher bracket pay the higher rate, so a raise never lowers your take-home. What is true is that the raise itself is taxed at your top rate, which is why this calculator applies the marginal haircut before splitting.
- What is lifestyle creep?
- Spending that rises to absorb every income increase. The Federal Reserve's 2024 SHED survey found 37 percent of adults reporting higher monthly spending than a year before, against 32 percent reporting higher income, the third straight year spending outpaced income. A standing split rule is the simplest defense, because it decides before the money arrives.
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Learn how this works
New to this topic? Our companion guide explains it in plain language: Save Half Your Raise: The Rule That Beats Lifestyle Creep
By Sam Sage Last reviewed .