Cost-of-Living Adjustment Calculator
A cost-of-living adjustment, or COLA, raises a salary or benefit to keep its purchasing power steady as prices rise. This calculator computes a CPI-based COLA the way many employers and benefit programs do: it scales the current amount by the ratio of the new Consumer Price Index to the old one. Enter your current salary or benefit and the CPI values for the earlier and later periods, and the tool returns the adjusted amount and the implied percentage increase. Because the adjustment is driven by the actual change in the price index, it reflects measured inflation rather than a guessed figure. The Consumer Price Index is published monthly by the US Bureau of Labor Statistics, and Social Security uses the CPI-W to set its annual COLA, so this method mirrors how official adjustments are made. The CPI inputs are kept fully editable so you can use whichever index and periods apply to your contract or program. This is a gross figure; taxes on the higher amount are handled separately, and the IRS governs the withholding on the additional wages. Every figure here is computed deterministically from the formula shown in full below, with a worked example that reconciles exactly to the calculator so you can follow each step.
A CPI-based COLA scales pay by the price index: adjusted = salary times (new CPI / old CPI). A $50,000 salary with CPI rising from 301 to 310 becomes $51,495.02, a 2.99% increase.
Cost-of-Living Adjustment formula
Adjusted amount = Current amount x (new CPI / old CPI)
Current amount = salary or benefit before the adjustment
new CPI = Consumer Price Index in the later period
old CPI = Consumer Price Index in the earlier period
COLA % = (new CPI / old CPI - 1) x 100
Scaling by the ratio of the two CPI readings applies exactly the measured inflation between the periods, which is how Social Security and many contracts set their adjustments.
Worked example
Find the adjusted salary when CPI rises from 301 to 310 on a 50,000 salary.
- Index ratio: 310 / 301 = 1.0299003
- Multiply by the salary: 50,000 x 1.0299003 = 51,495.02
- Adjusted amount = 51,495.02
- COLA percentage = (1.0299003 - 1) x 100 = 2.99%
These are the calculator's default inputs, so the result above matches the widget exactly.
Cost-of-Living Adjustment Calculator: frequently asked questions
What is a cost-of-living adjustment?
A cost-of-living adjustment, or COLA, increases a salary or benefit to offset rising prices so that real purchasing power is maintained. It is commonly tied to a published price index such as the Consumer Price Index.
Which CPI should I use?
Use the index named in your contract or program. Social Security uses the CPI-W. Many employment agreements use the CPI-U for all urban consumers. Enter the readings for the two periods you are comparing.
How does Social Security set its COLA?
Social Security compares the average CPI-W for the third quarter of the current year with the same quarter of the prior year that last triggered an adjustment, and raises benefits by that percentage. The Bureau of Labor Statistics publishes the underlying index.
Is a COLA the same as a raise?
A COLA is a specific type of increase meant only to keep pace with inflation. A merit or promotion raise adds real income on top of any cost-of-living adjustment.
What is the COLA formula?
Adjusted amount equals the current amount times the new CPI divided by the old CPI. With CPI rising from 301 to 310, a 50,000 salary becomes 51,495.02.
Official sources
- US federal payroll, withholding and reimbursement guidance: US Internal Revenue Service (IRS). As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.