Adding tax or taking it out
Choose what you want to work out. Add tax to a price gives the tax and the total for a price before tax, which is what you need when shopping or writing an invoice. Find the price before tax works backward from a total, such as a receipt, to the price and the tax inside it.
Enter the combined rate for the place of sale, such as 7.25 for 7.25%. Both answers are rounded to the nearest cent, with half a cent rounding up.
The sales tax formulas
Adding tax and taking it out use the three formulas below. Taking the rate off the total is a common mistake: 8% off $108 is $99.36, but the price before 8% tax was $100, because the tax was 8% of $100, not of $108.
- Sales tax = price × rate ÷ 100
- Total = price + sales tax
- Price before tax = total ÷ (1 + rate ÷ 100)
Worked example: a $249.99 purchase at 7.25%
For a $249.99 item at 7.25% sales tax, 249.99 × 7.25 ÷ 100 is 18.124275, which rounds to $18.12 of tax. The total is $268.11.
Going the other way, a receipt for $268.11 at 7.25% gives 268.11 ÷ 1.0725 = 249.986, which rounds to $249.99 before tax. The tax inside the total is $18.12.
Finding the rate where you are
In the US, sales tax is set by states and often added to by counties, cities and special districts. The rate you pay is the combined rate for the place of sale, which for online orders is usually your delivery address. Your state's department of revenue publishes current rates, and most let you look up the rate for an address.
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, though some towns in Alaska and Montana charge a local one.
What gets taxed
Each state decides what is taxable. Many exempt or reduce the tax on groceries and prescription drugs, many services are not taxed, and shipping charges are taxed in some states but not others.
VAT and GST in other countries use the same arithmetic, but they are usually already included in shelf prices. Use Find the price before tax with the VAT or GST rate to see how much of a price is tax.