How to use the Sales Tax Calculator
- Choose Add tax to start from a pre-tax price, or Remove tax to start from a price that already includes tax.
- Enter the amount and the tax rate.
- Tick Add a second rate to combine state and local taxes, and pick VAT or GST if that is what your country calls it.
- Read the price before tax, the tax amount and the total.
Features
- Add tax, or remove it from a tax-inclusive price
- Two combined rates, such as state plus local
- Labels for sales tax, VAT or GST
- Clear net, tax and gross breakdown
- Works with any currency
Adding tax to a price
To add tax, multiply the pre-tax price by one plus the rate: Total = Net × (1 + Rate ÷ 100). The tax itself is Net × Rate ÷ 100. A 100 item at 8.25% carries 8.25 of tax and costs 108.25.
Removing tax from a total
Working backwards is where most mistakes happen. You cannot subtract the rate from the total, because the tax was calculated on the smaller pre-tax price. Divide instead: Net = Total ÷ (1 + Rate ÷ 100).
Example: a receipt for 120 includes 20% VAT. The price before VAT is 120 ÷ 1.20 = 100, and the VAT is 20. Taking 20% off 120 would give 96, which is wrong by 4. The tax share of any tax-inclusive price is Rate ÷ (100 + Rate), so at 20% the tax is one sixth of the total.
Sales tax, VAT and GST
The arithmetic is the same, but the systems differ:
- Sales tax in the United States is charged once, at the final sale to the consumer. There is no federal sales tax; states, counties and cities set their own rates, and shelf prices usually exclude tax.
- VAT (value-added tax), used in the UK, the European Union, the UAE, Saudi Arabia and many other countries, is collected at each stage of production, with businesses reclaiming the VAT they paid on their inputs. Consumer prices normally include it.
- GST (goods and services tax), used in countries such as Australia, Canada, India and New Zealand, works much like VAT.
| Country | Tax | Standard rate |
|---|---|---|
| United Kingdom | VAT | 20% |
| United Arab Emirates | VAT | 5% |
| Saudi Arabia | VAT | 15% |
| Australia | GST | 10% |
| Canada | Federal GST | 5%, plus provincial tax in most provinces |
Rates change, and many countries have reduced rates for food, medicine or children’s goods, so check the current rate with your tax authority.
Combining two rates
In the US a purchase often carries a state rate plus a county or city rate. Both apply to the same pre-tax price, so they simply add: 6% state plus 2.5% local is 8.5% in total. Tick the second-rate option to see each part separately, which helps when you record tax for bookkeeping.
Tips for businesses
- Decide whether your prices are shown with or without tax and stay consistent on every invoice.
- Round tax per invoice or per line as your local rules require; totals can differ by a cent.
- Work out margins on prices before tax, since the tax is not your revenue. The Profit Margin Calculator helps.
Results are estimates for information only and are not financial or tax advice.
Frequently asked questions
How do I calculate sales tax backwards?
Divide the tax-inclusive price by 1 plus the rate as a decimal. With 8% tax, 54.00 ÷ 1.08 = 50.00 before tax, so the tax was 4.00.
Is VAT calculated the same way as sales tax?
Yes, the percentage math is identical. The differences are in how the tax is collected and whether shelf prices already include it.
How do I combine state and local sales tax?
Add the rates together, because both apply to the same price. Tick Add a second rate to see each tax amount separately.
Why can’t I just subtract the percentage to remove tax?
Because the tax was calculated on the lower pre-tax price. Subtracting 20% from a 120 total gives 96, but the real pre-tax price is 100.
Which US states have no sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, although some Alaskan towns charge a local one.