Percentage change vs percentage points

What each one actually measures

Both phrases describe the same movement, but they answer different questions. Percentage points answer "how far did the rate move?" Percentage change answers "how much bigger or smaller is it than it was?"

• Percentage points: subtract one percentage from the other. 25% minus 20% is 5 percentage points. The unit only makes sense when both numbers are already percentages — rates, shares, margins, interest.
• Percentage change: divide the size of the move by the starting value. Five points on a base of 20 is 5 ÷ 20 = 0.25, so a 25% increase. This works on any numbers, not just percentages.

Shorthand worth knowing: "pp" or "bps" (basis points, one hundredth of a percentage point) exist precisely because writing "percent" for both meanings is ambiguous. A 0.25 pp rate rise is 25 basis points.

The formulas

• Percentage-point change = new rate − old rate
• Percentage change = (new − old) ÷ old × 100
• What percent is X of Y = X ÷ Y × 100

The middle one is the one people get backwards: the denominator is always the starting figure, not the ending one, and not the average of the two. The percentage calculator runs all three and shows the working, which is the fastest way to sanity-check a number before you quote it.

Worked examples

1. 1Take the headline case: a rate goes from 20% to 25%. The gap is 25 − 20 = 5, so five percentage points.
2. 2For the relative move, divide by the starting rate: 5 ÷ 20 = 0.25, which is a 25% increase.
3. 3Check it the other way round: 20% increased by 25% is 20 × 1.25 = 25%. Both descriptions land on the same rate.
4. 4Now reverse it. Going back from 25% to 20% is still 5 percentage points, but only a 20% decrease, because the base is now 25 (5 ÷ 25 = 0.2). Percentage change is not symmetric; percentage points are.

Where mixing them up changes the story

A mortgage rate moving from 3.50% to 4.25% is a rise of 0.75 percentage points. Report it as a "21% rate increase" and it sounds alarming; report it as "up 0.75 points" and it sounds minor. Both are arithmetically true, and only one of them tells you what happens to the payment — which is neither figure, but the monthly number the loan payment calculator produces from the new rate.

The same trap shows up in pricing. Lifting a margin from 8% to 10% is 2 percentage points, but it is a 25% increase in the profit each sale keeps. If you are setting prices, the points version understates what you gained; the profit margin calculator shows the dollars behind either framing.

And in pay: a raise quoted as "an extra 3 percentage points of salary" is meaningless without knowing what the base rate refers to, whereas a 3% raise on $60,000 is $1,800. The raise percentage calculator converts between the amount and the percentage either way.

Which one to use

• Use percentage points when both figures are rates or shares and you want the plain size of the move: interest rates, tax rates, margins, market share, poll numbers, occupancy.
• Use percentage change when you want to convey scale relative to where things started: revenue growth, price rises, headcount, traffic, savings balances.
• Use both when the audience needs context — "up 5 points, a 25% increase" removes the ambiguity entirely and costs six words.
• Never subtract two percentages and call the result a percent change, and never quote a relative change on a rate without saying it is relative. For sequential markdowns, use the discount calculator because each discount applies to the price left after the previous one.