How to Calculate Sales Tax - Softotech

How to Calculate Sales Tax: Formula, Examples and Reverse Calculation

Sales tax is the price times the tax rate. This guide shows the formula, the reverse calculation, and the Excel version.

The formula

Sales tax = price x tax rate, with the rate written as a decimal. A 7.5% rate is 0.075.

Total = price + sales tax, or price x (1 + rate).

Worked example

An item costs $80 and the rate is 7.5%.

StepCalculationResult
Convert the rate7.5 / 1000.075
Sales tax$80 x 0.075$6.00
Total$80 + $6.00$86.00

Reverse: find the price before tax

If you only know the total, divide by 1 plus the rate: price = total / (1 + rate). From a $86.00 total at 7.5%: 86 / 1.075 = $80.00, so the tax was $6.00.

Find the tax rate

Rate = (total – price) / price. If you paid $86 for an $80 item, (86 – 80) / 80 = 0.075, or 7.5%.

Use Excel

With the price in A2 and the rate in B2 (formatted as a percentage):

  • Tax: =A2*B2
  • Total: =A2*(1+B2)
  • Price from total: =A2/(1+B2)

Round to cents with ROUND, for example =ROUND(A2*B2,2). See percentage formulas in Excel for more.

Which rate do I use?

In the US the rate depends on the state, and often the county or city too, and some items are exempt or taxed at a different rate. Check your state revenue department or the receipt for the combined rate that applies to your location. Businesses should confirm what they must collect with their state.

Related calculators

Working out discounts before tax? Try the discount calculator. For paychecks, see the paycheck calculator.

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    Frequently asked questions

    How do I calculate 8% sales tax?

    Multiply the price by 0.08. On $50 the tax is $4.00 and the total is $54.00.

    Is sales tax calculated before or after a discount?

    Usually on the discounted price, but rules vary by state and by whether the discount is a store or manufacturer coupon.

    How do I back out sales tax from a total?

    Divide the total by 1 plus the tax rate, for example total / 1.08 for an 8% rate.

    Does the sales tax rate include local taxes?

    The combined rate is state plus local. Look up the combined rate for your address.

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    More free tools: All free tools · Discount calculator · Percentages in Excel · Paycheck calculator