Getting a Raise in 2027? Budget It Before It Disappears
See your own safe-to-spend number Free paycheck budget, set up in 60 seconds →Most raises in 2027 will be about 3.5%, and 13 states raise their minimum wage, 12 of them on January 1. Prices rose 3.7% in the year to September, so an average raise mostly keeps you even. Unless you decide where it goes, it disappears into the same life at higher prices. That's true at $15 an hour and at $400,000 a year. Decide before the first bigger paycheck lands.
A 3.5% raise vs 3.7% inflation
Mercer QuickPulse survey of U.S. employers, July 2026; BLS Consumer Price Index, September 2026.
| Measure | 2027 |
|---|---|
| Merit raise budget (Mercer) | 3.2% |
| Total raise budget (Mercer) | 3.5% |
| Average raise (WTW) | 3.4% |
| Inflation, year to September 2026 (BLS) | 3.7% |
If your costs rise with prices, a 3.5% raise leaves you about where you were. Budgeting decides whether the raise does anything for you.
Minimum wage increases in 2027
| State | 2026 | 2027 | Extra per 40-hour week | Extra per year |
|---|---|---|---|---|
| Washington | $17.13 | $17.73 | $24.00 | $1,248 |
| Connecticut | $16.94 | $17.48 | $21.60 | $1,123 |
| California | $16.90 | $17.40 | $20.00 | $1,040 |
| Rhode Island | $16.00 | $17.00 | $40.00 | $2,080 |
| New Jersey (most workers) | $15.92 | $16.48 | $22.40 | $1,165 |
| Colorado | $15.16 | $15.71 | $22.00 | $1,144 |
| Maine | $15.10 | $15.70 | $24.00 | $1,248 |
| Arizona | $15.15 | $15.65 | $20.00 | $1,040 |
| Michigan | $13.73 | $15.00 | $50.80 | $2,642 |
| Virginia | $12.77 | $13.75 | $39.20 | $2,038 |
| Minnesota | $11.41 | $11.87 | $18.40 | $957 |
| Ohio | $11.00 | $11.40 | $16.00 | $832 |
| Alaska (July 1) | $14.00 | $15.00 | $40.00 | $1,040 for the half year |
Before taxes, full time (2,080 hours a year). Some cities and counties set higher rates; Seattle reaches $22.14. New York skips its January increase and stays at $17.00 in New York City, Long Island and Westchester and $16.00 elsewhere.
What a 3.5% raise is worth at your income
| Salary | Raise per year | Per biweekly paycheck, before tax |
|---|---|---|
| $31,200 ($15 an hour) | $1,092 | $42 |
| $60,000 | $2,100 | $81 |
| $100,000 | $3,500 | $135 |
| $200,000 | $7,000 | $269 |
| $400,000 | $14,000 | $538 |
At $400,000, the raise is $538 a paycheck before tax, enough to cover a new lease payment if you let it. Lifestyle creep costs more in dollars at higher incomes, and it's harder to notice because the bills still get paid.
Give the raise a job before you see it
- Change the budget the week you hear about the raise. A simple split: half to the prices that went up, half to one goal, such as debt, savings or retirement.
- Raise your 401(k) contribution by 1% of pay. On $60,000 that's $600 a year, about $23 a paycheck before tax. It uses less than a third of the raise and you won't miss it.
- On minimum wage, build a cushion first. An extra $16 to $51 a week builds a $500 starter cushion in 10 to 32 weeks. That cushion keeps a flat tire off a credit card.
- Don't add a fixed bill. A raise turned into a car payment is gone for five years. A raise turned into savings can still be spent later, on purpose.
- Wait for the first new paycheck. Many raises take effect after spring reviews, not January 1. Budget the raise when it's in your pay, not when it's promised.
Earning more? Three things change with the raise
- Your raise lands in your top tax bracket, so less of each raise dollar reaches your paycheck than your average tax rate suggests.
- Deductions phase out. The 2025 law's overtime and tips deductions shrink above $150,000 of income ($300,000 for couples), and the senior deduction above $75,000 ($150,000). A raise near those lines can cost part of a deduction.
- The 401(k) limit may already be maxed. It's $24,500 for 2026, and the IRS hasn't announced 2027's yet. Above $192,300 of pay, Social Security tax also stops for the year, which makes late-year paychecks bigger. That bump isn't a raise. How the 2027 wage cap changes your paychecks.
Give every raise a job.
MyGood plans each paycheck, sets savings aside like a bill and runs a debt snowball with payoff dates, so a raise goes where you decided. Free, no bank login.
Try MyGood free → Prices still climbing? Is budgeting the best defense against inflation?This article is general education, not tax or investment advice.
Sources
- Mercer, US employers stick with moderate pay increases for 2027, 2026.
- CFO Dive, Companies aim for more strategic pay increases: WTW report, 2026.
- Experian Employer Services, 2027 state-by-state minimum wage changes, October 9, 2026.
- Washington State Department of Labor & Industries, Washington's minimum wage rises to $17.73 an hour in 2027, September 30, 2026.
- New York State, New York State minimum wage for 2027.
- Bureau of Labor Statistics, Consumer Price Index, September 2026 release (October 14, 2026).
- IRS, One, Big, Beautiful Bill provisions for individuals and workers (phase-outs).
Frequently asked questions
How much will raises be in 2027?
U.S. employers plan average total pay increases of about 3.5% for 2027, with 3.2% for merit raises, according to Mercer. WTW puts the average at 3.4%.
Which states raise the minimum wage in 2027?
Washington ($17.73), Connecticut ($17.48), California ($17.40), Rhode Island ($17.00), New Jersey ($16.48 for most workers), Colorado ($15.71), Maine ($15.70), Arizona ($15.65), Michigan ($15.00), Virginia ($13.75), Minnesota ($11.87) and Ohio ($11.40) raise their rates in 2027, most on January 1. Alaska rises to $15.00 on July 1. New York skips its January increase.
Is a 3.5% raise enough to beat inflation?
Not quite. Consumer prices rose 3.7% in the year to September 2026, so an average raise roughly keeps you even if your costs rise with prices. What you do with the raise decides whether you get ahead.
What should I do with a raise?
Decide before the first bigger paycheck: split it between the costs that went up and one goal, raise your 401(k) contribution by about 1% of pay, build a starter cushion if you have none, and avoid turning it into a new fixed bill.
Do high earners need a budget?
Yes. Higher incomes come with bigger fixed costs, raises taxed at the top bracket, deduction phase-outs and a Social Security tax cap that makes late-year paychecks temporarily bigger. A budget keeps those from turning into lifestyle creep. MyGood is a free budgeting app that plans each paycheck without connecting your bank.