Sales Tax Calculator
A sales tax calculator determines the sales tax charged on a purchase and calculates the total price after tax. It can also be used to find the original price when the tax-inclusive total and tax rate are known.
What Is Sales Tax?
Sales tax is a percentage added to the purchase price of certain goods and services. The applicable rate depends on the location and type of purchase.
Sales Tax Formula
To calculate the sales tax:
Sales Tax = Original Price Γ (Tax Rate Γ· 100)
To calculate the total price including tax:
Total Price = Original Price + Sales Tax
Or:
Total Price = Original Price Γ (1 + Tax Rate Γ· 100)
How to Calculate Sales Tax
Suppose an item costs $100 and the sales tax rate is 8%.
First calculate the tax:
Sales Tax = $100 Γ (8 Γ· 100) = $8
Then calculate the total:
Total Price = $100 + $8 = $108
The customer would pay $108 in total.
Sales Tax Example
| Value | Amount |
|---|---|
| Original price | $250 |
| Sales tax rate | 6% |
| Sales tax | $15 |
| Total price | $265 |
Finding the Price Before Tax
If you know the total price including tax and the tax rate, you can calculate the original price using:
Original Price = Total Price Γ· (1 + Tax Rate Γ· 100)
For example, if the tax-inclusive price is $108 and the tax rate is 8%:
Original Price = $108 Γ· 1.08 = $100
The sales tax is therefore $8.
Sales Tax vs. Other Taxes
Sales tax is generally charged at the point of sale and is calculated as a percentage of the taxable purchase price. Other charges, such as VAT, GST, excise taxes, or service fees, may follow different rules.
Multiple Tax Rates
Some locations apply more than one tax rate, such as state, provincial, county, or local taxes. If separate rates apply, the total tax rate may be calculated by adding the applicable rates, subject to local tax rules.
For example, a combined tax rate of 7.5% on a $200 purchase would result in:
$200 Γ 0.075 = $15
The total would be $215.
Common Mistakes to Avoid
Make sure the tax rate is entered as a percentage rather than a decimal when using the standard formula. For example, 8% means 8 Γ· 100 = 0.08.
Also check whether the item is taxable in the relevant location because not every product or service is necessarily subject to sales tax.
Quick Summary
A sales tax calculator finds the tax amount and final purchase price. Use Sales Tax = Price Γ (Tax Rate Γ· 100), then add the tax to the original price. You can also reverse the calculation to find the pre-tax price from a tax-inclusive total.