Percent vs Percentage Points: What Is the Difference?

News stories often say "the interest rate rose by 1%" when the rate went from 4% to 5%. Whether that is right depends on what the writer meant, and the two possible meanings are quite different in size.

Two different measurements

A percentage point is the simple difference between two percentages. From 4% to 5% is a rise of 1 percentage point.

A percent change compares that difference with the starting value. The same move from 4% to 5% is a rise of 1 ÷ 4 = 25%.

Change in percentage points = new % − old %
Percent change              = (new % − old %) ÷ old % × 100

More examples

Why it matters

The two descriptions can sound similar and mean very different things. A tax rate that goes from 20% to 21% has risen by one percentage point, which sounds small, but it is a 5% increase in what people pay. A politician who says taxes rose "5%" and one who says they rose "1%" can both be correct.

How to write it clearly

• Use percentage points when you subtract one percentage from another.
• Use percent when you compare a change with the starting value.
• When it could be ambiguous, give both: "from 4% to 5%, up one percentage point or 25%".
• Always include the starting and ending values, so readers can check.

The mistake in the other direction

A change of 10 percentage points cannot be described as "10% more" unless the base was 100%. If a rate goes from 40% to 50%, that is 10 points but a 25% rise.

A related trap

Percent changes do not add up over time. A 10% rise followed by a 10% fall leaves you at 99% of where you began, because the fall applies to a larger number. See how to calculate percentage increase and percentage decrease.

Try the percentage increase calculator to see the same change expressed both ways.