Money
Sales Tax & VAT Calculator
Enter a price and a rate. The tax-exclusive and tax-inclusive figures are both shown.
The formula
tax to add = amount × rate ÷ 100
total with tax = amount × (1 + rate ÷ 100)
price before tax = amount ÷ (1 + rate ÷ 100)
tax already inside = amount − price before tax
Worked example
$250 at 20%
- As a net price: 250 × 0.20 = $50.00 tax, total $300.00
- As a gross price: 250 ÷ 1.20 = $208.33 net, so $41.67 of it is tax
- Note the two tax figures differ: $50.00 against $41.67
Where this goes wrong
Subtracting the rate to remove the tax
Taking 20% off a tax-inclusive price does not give you the price before tax. £120 including 20% VAT is £100 net, not £96 — you divide by 1.20, you do not multiply by 0.80. The gap is 4% of the total here, and it grows with the rate: at 25% the wrong method is out by 6.25%. This is the single most common invoicing error, and it always favours the taxman.
Questions
- How do I work out the price before tax?
- Divide the total by 1 plus the rate as a decimal. At 20%, divide by 1.2; at 8.5%, divide by 1.085. Do not subtract the percentage — that answers a different question and always gives too small a number.
- What is the sales tax rate where I am?
- This page will not guess. In the United States, sales tax is set by state, county, city and sometimes special districts, and the combined rate at one address can differ from the rate a mile away; there is no single national figure to default to. Check your state revenue department, or read the rate off a recent receipt.
- Is VAT the same as sales tax?
- The arithmetic on this page is identical; the systems are not. Sales tax is charged once, at the final sale. VAT is charged at every stage, with businesses reclaiming what they paid, so the consumer bears the same total but the collection is spread along the chain. For working out a price, the formula is the same.
- Why are the two tax figures different?
- Because they answer different questions. $50 is the tax on a $250 net price; $41.67 is the tax contained in a $250 gross price. The same rate applied to different bases gives different amounts, which is exactly why the page shows both instead of picking one.