How to Calculate Sales Tax

Tax = Price × Rate ÷ 100. At 6%, the tax on a $35 item is 35 × 0.06 = $2.10, so you pay $37.10.

To get the total in one step, multiply by 1 plus the rate:

The "1" keeps the original price and the ".06" adds the tax on top.

Combined state and local rates often have extra decimals. The rule doesn't change: divide by 100 by moving the decimal point two places left.

• 7.25% → 0.0725 (multiplier 1.0725)
• 8.875% → 0.08875 (multiplier 1.08875)
• 9.5% → 0.095 (multiplier 1.095)

A common slip is typing 8.875% as 0.8875, which is ten times too much. Check that the tax is a small fraction of the price.

Start from 10% (move the decimal point one place left), then adjust:

• 8% of $45: 10% is $4.50, 2% is $0.90, so 8% is 4.50 − 0.90 = $3.60.
• 6% of $70: 1% is $0.70, so 6% is 6 × 0.70 = $4.20.
• About 7% of $200: 1% is $2, so 7% is about $14.

For a quick ballpark, rounding the rate to the nearest whole percent is usually close enough to know whether you can afford something.

Before tax = Total ÷ (1 + Rate ÷ 100). If you paid $91.80 including 8% tax:

Don't subtract 8% of the total. That gives 91.80 × 0.92 = $84.46, about 54 cents too low, because the tax was calculated on $85, not on $91.80.

In the US, sales tax is usually added at the register, so the shelf price is lower than what you pay. In many other countries, VAT or GST is usually already included in the shelf price.

The math is the same either way. To find the price without VAT, divide by 1 plus the rate:

Tax is rounded to the nearest cent, and it matters when the rounding happens. Take three $0.99 items at 8.25% tax:

• Tax per item: 0.99 × 0.0825 = 0.0817, which rounds to $0.08. Three items: $0.24.
• Tax on the total: 2.97 × 0.0825 = 0.245, which rounds to $0.25.

Both are reasonable, and stores differ in which they use. A difference of a cent or two usually comes from rounding, not from a wrong rate.

To know the most you can spend on the price tag, divide your budget by the multiplier. With $200 to spend and 7% tax:

Round down, not up: $186.92 plus tax would come to $200.00 only after rounding, and anything higher goes over. If you have a discount too, apply it first, then the tax. The discount guide shows how.

Try each one, then open the answer.

1. What is the total for a $35 item at 6% tax?
   Show answer

   35 × 1.06 = $37.10 (tax $2.10)
2. You paid $91.80 including 8% tax. What was the price before tax?
   Show answer

   91.80 ÷ 1.08 = $85
3. A receipt shows a $60.00 subtotal and a $64.65 total. What is the tax rate?
   Show answer

   4.65 ÷ 60 × 100 = 7.75%
4. A price of 84 includes 20% VAT. How much is the VAT?
   Show answer

   84 ÷ 1.2 = 70, so the VAT is 14
5. You have $100 and the tax rate is 9.5%. What is the highest price you can afford?
   Show answer

   100 ÷ 1.095 ≈ 91.324, so $91.32