The Percentage Change Formula
Percentage change measures how much a value has shifted relative to its starting point:
% change = ((new value − old value) / |old value|) × 100
A positive result means the value increased. A negative result means it decreased. The absolute value of the original is used in the denominator so that results are directionally intuitive even when the original is negative.
Percentage Change vs. Percentage Points
These two concepts are frequently confused. If a tax rate rises from 20% to 25%, the change is 5 percentage points — but the percentage change in the tax rate is (25 − 20) / 20 × 100 = +25%.
Percentage points are an absolute difference between two values already expressed as percentages. Percentage change is a relative shift from a base value. Financial reporting and medical research use both; mixing them up changes the meaning significantly.
The Asymmetry of Percentage Changes
A 50% drop followed by a 50% gain does not restore the original value. $100 drops 50% to $50 — then a 50% gain on $50 only brings it to $75. To fully recover, the gain must be 100% on the reduced base.
This asymmetry means consecutive percentage changes do not cancel in a simple way. For modeling multiple compounding periods, use a compound interest calculator.