The Treasury will pay out a Sovereign Grant of £37.89m, up from £36.1m the previous year.
The grant, which funds the Queen's activities, comes from the £8.6bn Crown Estate, which includes most of Britain's coastline and royal properties like Windsor Castle.
Last year it made record profits - triggering a corresponding increase in the Queen's income.
Queen to get 5% pay rise in 2014/15. Sovereign Grant to increase by £1.79m to £37.89m as Crown Estate profits grow http://t.co/eoSuA8nRqN— Paul Lewis (@paullewismoney) June 27, 2013
Under the 2011 Sovereign Grant Act, the Crown Estate profits are paid to the Treasury, which then pays 15% of them back to the Queen.
So it's official: the day after the Chancellor announces more sweeping cuts, the royals get yet another pay rise http://t.co/83yddXEwB7— Republic (@RepublicStaff) June 27, 2013
Crown Estate chairman Sir Stuart Hampson said: "We are proud that another record Crown Estate performance will again make a strong contribution to the nation's finances."
On Thursday, Chancellor George Osborne announced a further £11.5bn of spending cuts, including a public sector pay freeze and delays to unemployment benefit that charities fear will drive people into the arms of payday loan companies and force them to turn to food banks.