What is Merit Increase?
Quick answer
A merit increase is a raise tied to individual performance, typically delivered during the annual review cycle.
A merit increase is a raise tied to individual performance, typically delivered during the annual review cycle. Merit pools at most companies average around 3–4% and are distributed unevenly based on ratings.
Examples
- A 5% merit increase for a top-rated engineer.
- A 2% merit for a meets-expectations rating.
- Zero merit for a performance-improvement-plan employee.
Why this matters
RaiseCheck checks whether your merit is ahead of or behind the market — a 4% raise can still be a pay cut if comparable roles jumped 10%.
Read more in our guides
- Raise request email: templates and what to say in writing in 2026
- Average merit increase in 2026: what employers actually budget and what to expect
- What is total compensation? (2026 plain-English guide with worked examples)
Frequently asked questions
What is Merit Increase?
A merit increase is a raise tied to individual performance, typically delivered during the annual review cycle. Merit pools at most companies average around 3–4% and are distributed unevenly based on ratings.
When does Merit Increase matter?
RaiseCheck checks whether your merit is ahead of or behind the market — a 4% raise can still be a pay cut if comparable roles jumped 10%.
What's an example of Merit Increase?
A 5% merit increase for a top-rated engineer. A 2% merit for a meets-expectations rating. Zero merit for a performance-improvement-plan employee.
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