Find the price hiding inside a total
Receipts and price tags often show only the total, with tax already included. To record an expense, claim back VAT or GST, or check a quote, you need the price before tax and the tax itself. Taking the percent off the total gives the wrong answer, which is where a reverse tax calculator helps.
Type the total and the rate and you get both parts, rounded to the cent. Or switch modes to add tax to a price instead. You enter the rate yourself, so it works for US sales tax, UK and EU VAT, GST and any other percentage tax.
How to use it
- Choose Remove tax from a total, or Add tax to a price.
- Enter the amount.
- Enter the tax rate that applies, like 8.25 for 8.25% or 20 for 20% VAT.
- Read the price before tax and the tax, or the total with tax.
The reverse sales tax formula
price before tax = total ÷ (1 + rate ÷ 100)
tax = total − price before tax
total = price × (1 + rate ÷ 100)The key is that the tax was added to the price, not taken from the total. A total with 8.25% tax is 108.25% of the price, so you divide by 1.0825 to get back to 100%. Subtracting 8.25% of the total takes off too much.
Worked example: a total of 108.25 at 8.25%
- Divide by 1 plus the rate: $108.25 ÷ 1.0825 = $100.00
- The tax is the rest: $108.25 − $100.00 = $8.25
The price before tax was $100.00 and the tax was $8.25. The tempting shortcut, 8.25% of $108.25, gives $8.93, which is 68 cents too much. On a larger expense that kind of error becomes real money.
Dividers for common rates
| Tax rate | Divide the total by | Tax as a share of the total |
|---|---|---|
| 5% | 1.05 | 4.76% |
| 7% | 1.07 | 6.54% |
| 8.25% | 1.0825 | 7.62% |
| 10% | 1.10 | 9.09% |
| 15% | 1.15 | 13.04% |
| 20% | 1.20 | 16.67% |
The last column is handy for VAT: at 20%, the tax is one sixth of the total, not a fifth.
Common errors
- Taking the rate off the total. Always divide by 1 plus the rate instead.
- Using the wrong rate. City and county taxes can add to a state rate, and some items, such as some food, are taxed at a lower rate or not at all.
- Rounding each line on a long receipt. Work from the receipt total where you can, so small rounding differences do not add up.
- Mixing tax with tips or service charges. Take those off first; they are not part of the tax.
Frequently asked questions
How do I calculate the price before tax?
Divide the total by 1 plus the tax rate as a decimal. For a total of 54 with 8% tax, that is 54 ÷ 1.08 = 50. The tax is the difference, 4. Enter the total and rate above and the calculator shows both, rounded to the cent, with the steps written out.
Why can't I just take the tax percent off the total?
Because the tax was worked out on the price, not on the total. The total is bigger than the price, so a percent of it is too large. At 20% VAT, a total of 120 holds 20 of tax, which is one sixth of 120, not 20% of it. Dividing by 1.2 gets the right answer.
Does this work for VAT and GST?
Yes. Any tax added as a percentage of the price works the same way: sales tax, VAT, GST or HST. Enter the rate that applies and the calculator separates the tax from the total, or adds it to a price. It does not know local rates, so check the one that applies to you.
How do I add sales tax to a price?
Multiply the price by 1 plus the rate as a decimal. A 250 item with 7% tax costs 250 × 1.07 = 267.50 in total, of which 17.50 is tax. Choose Add tax to a price above to do this, and to see the tax amount on its own.
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