Retroactive Pay Calculator

Retro pay = (New rate − Old rate) × hours worked during the retroactive period. For salaried employees, it's the difference between the new and old per-period salary, multiplied by the number of pay periods the raise should have already applied to.

The IRS treats retro pay as supplemental wages, similar to a bonus — employers often withhold federal income tax on it at the flat 22% supplemental rate rather than your regular withholding rate, though it's still subject to regular FICA taxes.

Common situations include a raise or promotion that took effect later on paper than it should have, a delayed union contract settlement, a payroll error correction, or a minimum-wage law change applied after the fact.

Yes — if the employee worked overtime during the retroactive period, the overtime premium (1.5×) is owed on the rate difference too, not just the straight-time difference. Enter the overtime hours worked during the period to include this true-up in the total.