How the Sales Tax Calculator Works
Sales tax is a tax on what you buy. The seller adds it to the price at the checkout, and pays it to the government. The Sales Tax Calculator shows the tax and the total for any price. It can also work backwards, from a total that already includes tax, to the price before tax.
What you enter
- The amount you know.
- The sales tax rate as a percentage. Use your combined rate, which adds the state, county and city rates together.
- What the amount is: a price before tax, or a total after tax.
How the results are worked out
To add tax to a price:
sales tax = price x rate / 100 total = price + sales tax = price x (1 + rate / 100)
To take tax out of a total:
price before tax = total / (1 + rate / 100) sales tax = total - price before tax
When you work backwards, you divide. You do not simply subtract the rate from the total, because the tax was added to the price, so it is a percentage of the price and not of the total.
Example 1: adding tax
You buy something for $250.00, and the combined sales tax rate is 8.25%.
| Result | Amount |
|---|---|
| Price before tax | $250.00 |
| Sales tax ($250.00 x 8.25%) | $20.63 |
| Total | $270.63 |
The tax is $20.625 before rounding. It is rounded to the nearest cent.
████████████████████████████████████████ $270.63 ■ Price $250.00 ■ Sales tax $20.63
Example 2: taking tax out of a total
Your receipt shows a total of $250.00, and the rate is 8.25%.
| Result | Amount |
|---|---|
| Total | $250.00 |
| Price before tax ($250.00 / 1.0825) | $230.95 |
| Sales tax ($250.00 - $230.95) | $19.05 |
A common mistake is to take 8.25% of $250.00, which gives $20.63. That is wrong. The tax that is inside a total is 7.62% of the total, because 8.25 / 108.25 = 7.62%.
How the price and the rate change the tax
At a rate of 8.25%:
| Price | Sales tax | Total |
|---|---|---|
| $25 | $2.06 | $27.06 |
| $100 | $8.25 | $108.25 |
| $250 | $20.63 | $270.63 |
| $1,000 | $82.50 | $1,082.50 |
| $5,000 | $412.50 | $5,412.50 |
The tax on the same $250 price at different rates:
| Rate | Sales tax | Total |
|---|---|---|
| 4% | $10.00 | $260.00 |
| 6% | $15.00 | $265.00 |
| 8.25% | $20.63 | $270.63 |
| 10% | $25.00 | $275.00 |
4% ████████████████ $10.00 6% ████████████████████████ $15.00 8.25% █████████████████████████████████ $20.63 10% ████████████████████████████████████████ $25.00
Your combined rate
In the United States, the sales tax you pay is often the sum of several rates: a state rate, a county rate and a city or district rate. For example, 6.25% plus 2% is 8.25%. Rates differ from place to place, even within the same state. A few states have no statewide sales tax, which are Alaska, Delaware, Montana, New Hampshire and Oregon, although some local governments in Alaska charge their own. Check your current rate with your state or local tax office, since rates change.
Items that are not taxed
Many places do not tax some things, such as groceries, prescription medicine or clothing. Some tax them at a lower rate. To work out a purchase like this, tax only the taxable part. For example, your basket has $80 of taxable goods and $40 of groceries that are exempt, at 8.25%:
| Item | Amount |
|---|---|
| Taxable goods | $80.00 |
| Exempt groceries | $40.00 |
| Sales tax ($80.00 x 8.25%) | $6.60 |
| Total | $126.60 |
Taxable goods █████████████████████████ $80.00 Exempt groceries █████████████ $40.00 Sales tax ██ $6.60
Tips
- Use the combined rate for the place where you buy, or where the goods are delivered.
- Check whether a shelf price includes tax. In the United States, it usually does not.
- Plan big purchases with the tax. On a $30,000 car at 8.25%, the tax is $2,475.
- If you sell things, keep the tax on a separate line on your invoice.
- Round the tax to the nearest cent, as the seller does. Small differences of a cent can occur on a receipt with many items.
What this calculator does not include
- Different rates for different items in one order. Work each item out separately and add them up.
- Use tax, excise taxes, tourism taxes and other special charges.
- The rules for online sales and for items you ship to another state.
- VAT and GST, which work in a similar way but are counted differently in the accounts of a business.
This tool gives an estimate for general information only. It is not tax advice. Check the exact rate and rules with your tax authority or the seller.