About the Retro Pay Calculator
This retro pay calculator works out retroactive pay — the difference between what you were paid and what you should have been paid after a raise that took effect before it reached your paycheck. It handles salaried employees (old and new annual salary) and hourly workers (old and new hourly rate and hours per week) on weekly, biweekly, semimonthly or monthly payroll.
It is common after union contract settlements, delayed performance reviews, cost-of-living adjustments and minimum-wage increases, when the new rate applies from an earlier effective date. Payroll staff can use it to check a retro payment; employees can use it to confirm the lump sum on their payslip is right.
Enter the number of pay periods that were paid at the old rate after the raise took effect. Retro pay is taxable wages; in the US it is usually treated as supplemental wages, so the estimated net uses the withholding rate you enter. The default of 30% approximates the 22% optional flat federal supplemental rate in IRS Publication 15 (2026) plus 7.65% FICA (6.2% Social Security, which stops once your 2026 wages pass the $184,500 wage base, and 1.45% Medicare), before any state tax. Overtime paid during the period should also be recalculated at the higher rate, which this simple version does not include.
With the default inputs, the retro pay owed (gross) is $692.31. Change any value above to recalculate instantly.
How to use the retro pay calculator
- 1Choose salaried or hourly pay.
- 2Enter your old and new salary, or old and new hourly rate and weekly hours.
- 3Select how often you are paid.
- 4Count the paychecks you received at the old rate after the raise took effect.
- 5Read the gross retro pay and the estimated amount after withholding.
Formula and method
For salaried staff, the difference between the new and old annual salary is divided by the number of pay periods in a year (52 weekly, 26 biweekly, 24 semimonthly, 12 monthly) to get the underpayment on each paycheck. For hourly workers, the difference in hourly rate is multiplied by hours per week and 52 to get the annual difference first.
The per-period underpayment is multiplied by the number of paychecks issued at the old rate after the raise took effect. The estimated net applies a single withholding percentage to the gross retro amount, because retro pay is usually taxed as supplemental wages. If hours varied, or overtime was worked, calculate each period separately using the actual hours.
- New / Old annual pay
- Salary, or hourly rate × weekly hours × 52
- Periods underpaid
- Paychecks paid at the old rate after the effective date
Worked examples
$60k to $63k raise, 6 biweekly paychecks late
The $3,000 raise divided by 26 paychecks is $115.38 per check. Six checks were paid at the old salary, so $692.31 of back pay is owed. At 30% combined withholding the net lump sum is about $484.62.
Hourly worker, $20 to $21.50, 8 weekly paychecks
A $1.50 raise over 40 hours is $60 per weekly paycheck. Eight weeks at the old rate means $480 of retro pay, or about $336 after 30% withholding.
Monthly payroll, $48k to $52k for 5 months
A $4,000 raise is $333.33 a month. Five months of back pay is $1,666.67 gross; with 30% withheld the employee receives about $1,166.67.
Frequently asked questions
What is retro pay?+
Retro pay (retroactive pay) is compensation owed for work already done at a rate higher than what was paid — typically because a raise took effect before payroll processed it. It is paid as a lump sum on a later paycheck.
Is retro pay the same as back pay?+
Not quite. Retro pay covers the difference between an old and new pay rate for hours that were paid. Back pay covers wages that were not paid at all, such as missed hours, unpaid overtime or a wrongful termination award.
How is retro pay taxed?+
In the US retro pay is taxable wages and is usually treated as supplemental wages. For 2026 employers may withhold federal income tax at the optional flat 22% supplemental rate (37% on supplemental wages above $1 million), plus 6.2% Social Security up to the $184,500 wage base, 1.45% Medicare and any state tax.
Does retro pay include overtime?+
It should. If you worked overtime during the retro period, the overtime premium must be recalculated at 1.5 times the new regular rate, so the retro payment for those hours is 1.5 times the rate difference.
How long does an employer have to pay retro pay?+
Timing depends on the contract, collective agreement or state law. Most employers pay it on the next regular payroll after the raise is approved; union contracts often specify a deadline.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.