Sales Tax Calculator
Add tax to a net price, or work backwards from a tax-inclusive total to find the amount underneath. Enter any rate, so it handles US state sales tax as readily as UK VAT.
Formula
Gross = net × (1 + rate) · Net = gross ÷ (1 + rate)
- Tax = gross − net
- Rate as a decimal: 8.5% is 0.085
£50 net at 8.5%: £50 × 1.085 = £54.25, of which £4.25 is tax
Adding and Removing Tax
To add: multiply the net price by (1 + rate).
£45 at 20% = 45 × 1.20 = £54.00.
To remove: divide the gross price by (1 + rate).
£54 ÷ 1.20 = £45.00, leaving £9 of tax.
Never subtract the percentage from a gross figure. The tax was charged on the smaller net amount, so subtracting overstates it.
Sales Tax and VAT Work Differently
They arrive at a similar place by different routes:
- US sales tax is charged once, at the final sale, and is usually excluded from displayed prices.
- UK and EU VAT is charged at every stage of the supply chain, with businesses reclaiming what they pay, and consumer prices must be shown including it.
This is why a US shelf price rises at the till while a UK one does not.
Rates Vary by Location
US sales tax is set by state, county and often city, so a single address can carry three stacked rates and neighbouring towns can differ. Five states levy no state sales tax at all.
Always use the rate for the point of sale or delivery rather than a state average.
Quick Reference
| Rate | Net to gross | Gross to net | Tax on £100 net |
|---|---|---|---|
| 5% | × 1.05 | ÷ 1.05 | £5.00 |
| 7.5% | × 1.075 | ÷ 1.075 | £7.50 |
| 8.5% | × 1.085 | ÷ 1.085 | £8.50 |
| 10% | × 1.10 | ÷ 1.10 | £10.00 |
| 20% | × 1.20 | ÷ 1.20 | £20.00 |
Frequently Asked Questions
- How do I remove sales tax from a total?
- Divide the gross figure by 1 plus the rate as a decimal. At 8 per cent, divide by 1.08. Subtracting 8 per cent gives the wrong answer.
- Is sales tax the same as VAT?
- No. Sales tax is charged once at the final sale; VAT is charged at each stage with businesses reclaiming it. VAT is also included in displayed consumer prices.
- Which rate should I use?
- The one applying at the point of sale or delivery address, combining state, county and city rates where they stack.
- Do I charge tax on shipping?
- It depends on the jurisdiction. Some US states tax delivery charges and others do not, so check the rules for the state you are selling into.