How to Calculate Sales Tax (and Remove It From a Total)
Short answer
To add sales tax, multiply the price by the tax rate as a decimal and add it on: total = price × (1 + rate). At 8.25%, an $80 item costs 80 × 1.0825 = $86.60. To remove tax from a total, divide instead: price = total ÷ (1 + rate).
Sales tax, GST, HST and VAT all work the same way at the till: a percentage of the price is added on. Calculating it is simple once you turn the percentage into a decimal. The step people get wrong is going the other way, finding the pre-tax price from a receipt total. This guide covers both directions, with examples you can check in our sales tax calculator.
Step 1: Turn the tax rate into a decimal
Divide the percentage by 100. 8.25% becomes 0.0825, 13% becomes 0.13 and 20% becomes 0.20. This single step prevents most mistakes.
Step 2: Calculate the tax amount
Multiply the pre-tax price by the decimal rate:
tax = price × rate
For an $80 pair of shoes at 8.25%: 80 × 0.0825 = $6.60 in tax.
Step 3: Add it to get the total
total = price + tax, or in one step total = price × (1 + rate).
For the shoes: 80 × 1.0825 = $86.60. Using the one-step version is faster and works for any rate.
How to remove sales tax from a total
Suppose a receipt shows $108.00 including 8% tax, and you need the pre-tax amount for an expense report. Many people take 8% off the total: 108 × 0.92 = 99.36. That is wrong, because the 8% was calculated on the smaller, pre-tax price, not on 108.
The correct method is to divide by 1 plus the rate:
price before tax = total ÷ (1 + rate)
108 ÷ 1.08 = $100.00. The tax was $8.00. You can check: 100 × 1.08 = 108. Our calculator has a “remove tax from a total” mode that does this for you, which is especially useful for VAT-inclusive prices in Europe and the UK.
Worked examples with different taxes
| Situation | Calculation | Result |
|---|---|---|
| Add 8.25% to $80 | 80 × 1.0825 | $86.60 |
| Add 7% to $59.99 | 59.99 × 1.07 | $64.19 |
| Add 13% HST to $50 | 50 × 1.13 | $56.50 |
| Remove 13% from $113 | 113 ÷ 1.13 | $100.00 |
| Remove 8% from $108 | 108 ÷ 1.08 | $100.00 |
The rates in the table are examples only. Real rates depend on where you are and what you buy.
Where do sales tax rates come from?
Rates are set by governments and change from time to time.
- United States: there is no national sales tax. States, counties and cities each set their own, so the combined rate can differ between neighbouring towns, and some items such as groceries may be taxed differently or exempt. Check your state’s department of revenue for current rates.
- Canada: the federal GST applies across the country, and some provinces add a provincial sales tax or combine the two into a single HST. The Canada Revenue Agency publishes which rate applies in each province.
- UK, EU, India and many others: VAT or GST is usually included in shop prices, with several rate bands for different goods. Use the remove-tax method above to find the net price.
Discount and tax together
If an item is on sale, take the discount off first and then add tax to the reduced price. A $120 jacket with 25% off costs 120 × 0.75 = $90 before tax; at 8% tax the total is 90 × 1.08 = $97.20. Mathematically, the order of multiplication does not change the result, but most shops apply the discount first and show it that way on the receipt. The discount calculator handles the sale price, and our guide to percentages in everyday life has more shopping examples.
Rounding
Tax is usually rounded to the nearest cent on the final total. On receipts with many items, shops may round each line or only the total, which can create a one-cent difference from your own calculation. That is normal.
Sales tax for small businesses
If you sell goods or services, you may need to charge tax, show it clearly on invoices and pay it to the tax authority. In that case:
- Keep the pre-tax price, the tax and the total as separate figures in your records.
- When you set prices that include tax, use the divide method to find your real revenue.
- Check registration thresholds and filing rules with your local tax authority; they vary widely.
To see how tax interacts with your margins, read profit margin vs markup.
Quick mental shortcut
For a 10% rate, move the decimal point one place to the left: 10% of $45 is $4.50. For 5%, halve that: $2.25. For 8%, take 10% and subtract a fifth of it: 4.50 − 0.90 = $3.60. These shortcuts are good for estimates at the till; use the percentage calculator or the sales tax calculator when you need exact figures.
Frequently asked questions
How do I calculate 8% sales tax?
Multiply the price by 0.08 to get the tax, or by 1.08 to get the total. For $50, the tax is $4.00 and the total is $54.00.
How do I find the price before tax?
Divide the total by 1 plus the tax rate as a decimal. For a $108 total at 8%, 108 ÷ 1.08 = $100. Do not simply subtract 8% of the total.
Is sales tax added before or after a discount?
Normally the discount is taken off first and tax is charged on the reduced price. Mathematically the final total is the same either way.
Why does my calculation differ by one cent from the receipt?
Shops may round tax on each item or only on the total. Small rounding differences of a cent are normal.
What is the difference between sales tax and VAT?
Sales tax is usually added at the till and shown separately, as in the US. VAT is normally included in the displayed price and is collected at each stage of production. For shoppers, the maths for adding or removing it is the same.