Tax Calculator
Tax Breakdown
What is a Tax Percentage?
A tax percentage is a mandatory financial charge levied by a government on goods, services, or income, expressed as a fraction of 100. In retail and commerce, this usually takes the form of Sales Tax, Value Added Tax (VAT), or Goods and Services Tax (GST).
Understanding how to calculate tax percentages is critical for business accounting, travel budgeting, and verifying that you haven't been overcharged on a receipt. New Feature: You can now toggle between 8 global currencies (USD, Euro, Rupee, AUD, GBP, CAD, Yen, and Dinar) to localize your calculations!
Adding Tax vs. Extracting Tax
Our calculator has two modes because working with taxes forward and backward requires completely different mathematical formulas.
➕ Mode 1: Add Tax to Price
- Use when: You see a price tag on a shelf and want to know what it will cost at the register.
- The Math: Multiply the price by the tax rate decimal, then add it to the original price. This is mathematically identical to a standard increase by percentage calculation.
Example: $100 + 5% tax = $105 total.
🔙 Mode 2: Extract Tax from Total
- Use when: You have a final receipt and need to figure out exactly how much of that total was tax.
- The Math: Divide the total by (1 + tax rate decimal).
Example: $105 total. $105 ÷ 1.05 = $100 pre-tax amount.
Common Tax Calculations
See exactly how the math works for adding or extracting tax.
Add 8% Sales Tax
Base: $100
Add 20% VAT
Base: $50
Extract 5% Tax
Total: $105
Extract 20% VAT
Total: $120
⚠️ The "Reverse Tax" Math Trap
The most common accounting mistake in the world is trying to find the pre-tax amount by taking a flat percentage off the final total. This does not work.
If a total is $120 and includes a 20% VAT, taking 20% off $120 gives you $96. But if you add 20% to $96, you only get $115.20! To accurately strip the tax out, you must use the extraction mode (division), which correctly reveals the pre-tax amount is $100.
Global Tax Systems Explained
Sales Tax (USA)
In the United States, tax is almost always added at the register. The price you see on the shelf is the pre-tax amount. You must use the "Add Tax" mode to find out what you will actually pay.
VAT (Europe & UK)
Value Added Tax is usually included in the sticker price. The price on the shelf is exactly what you pay. Businesses use the "Extract Tax" mode to calculate how much VAT they owe the government.
GST (Australia, Canada, India)
Goods and Services Tax operates similarly to VAT. If you are filing business expense claims, you must calculate the exact GST portion of a receipt to claim your tax credits.
Restaurant Tax vs. Tips
Taxes are legally mandated, whereas tips are voluntary. When calculating a tip, it is best practice to tip on the pre-tax subtotal rather than the post-tax final total. Need to split that final bill? Use our Tip Calculator.
Frequently Asked Questions
1. How do you calculate sales tax manually?
Convert the tax rate to a decimal by dividing by 100, then multiply it by the item's price. For example, a 5% tax on a $100 item is 0.05 × 100 = $5 tax. Add that to the $100 for a final total of $105.
2. How do I extract tax backwards from a total?
To find the pre-tax price from a final receipt, convert the tax percentage to a decimal, add 1, and divide the total by that number. For a $105 total with 5% tax, divide $105 by 1.05 to get the original $100.
3. Is removing tax the same as a percentage discount?
No. Taking 20% off a post-tax total will give you the wrong number. You must divide the post-tax total by 1.20 to accurately extract a 20% VAT or tax. If you are actually trying to calculate a retail sale markdown, use our dedicated Discount Calculator instead.
4. Are shipping costs taxed?
This depends entirely on your local state or country laws. In some regions, shipping is considered a taxable service, while in others it is exempt. Check your local commerce guidelines.