According to Jamie Jackson of the Guardian, the negotiations will begin in February, with City keen to reward the forward for his incredible form in the 2017-18 campaign.
"Sterling earns around £170,000 a week basic and can expect a rise of at least £50,000 a week, along with lucrative incentives that would push his salary beyond the £250,000-a-week mark," continued Jackson. "This would put him in the top band of earners at City."
Jackson added that if Kevin De Bruyne also signs a new deal, he'd be the only player on a bigger salary than the England international. Should Alexis Sanchez join from Arsenal this month, he would also command a larger wage packet.
It's difficult to argue against Sterling being one of the top earners at the Etihad Stadium, as he's been sensational for Pep Guardiola's side this season, netting 18 times in all competitions.
As Scouted Football noted, the 23-year-old has often conjured something at a crucial moment for his team:
Scouted Football @ScoutedFtbl
Raheem Sterling (23) has scored four match-winning goals after the 80th minute this season: ⚽ 97' vs Bournemouth ⚽ 88' vs Feyenoord ⚽ 84' vs Huddersfield ⚽ 96' vs Southampton City might need another here... https://t.co/W9yfvj34u12017-12-31 13:09:58
Ahead of this campaign, few would have expected Sterling to be in the race for the Golden Boot, and it's worth remembering he didn't actually start the first two games of the Premier League season.
Now Sterling is a crucial man in Guardiola's setup, typically manning the right flank. Alongside Sergio Aguero and Leroy Sane, he's formed an incredible front three that has been the key for City surging to the summit of the Premier League table, with 15 points between them and nearest rivals Manchester United.
Sterling has so often been the man to capitalise on the incisive football being played by City, regularly getting into position to finish off opportunities.
The man himself said in December that he feels as though he's becoming a more productive footballer, per Goal UK:
Goal UK @GoalUK
Man City ace Raheem Sterling says he has sacrificed flair for efficiency under Pep Guardiola this season. ⚽️ https://t.co/5Mxph5cIZG2017-12-28 11:28:38
In the 2017 summer transfer window, there was some speculation about Sterling potentially leaving City, with John Cross of the Daily Mirror suggesting Arsenal were keen to include the forward in a possible deal for Sanchez.
Given the improvements he has made this term, there doesn't appear to be any chance of the England international moving on anymore. A new long-term contract would be a renewed show of faith in the City No. 7.
The challenge for Sterling now will be to preserve and better his performances. At times there have been questions asked as to whether he was capable of living up to the hype that accompanied his breakthrough. At City and under Guardiola, his career is on an exciting upward trajectory.