Quick answer: To add tax multiply the price by (1 + rate). To remove tax from a total, divide by (1 + rate), do not subtract the rate. Adding 8.5% sales tax to $100 gives $8.50 of tax and a $108.50 total, and a price of 120 that includes 20% VAT is 100 before tax.
Sales tax, VAT and GST all work the same way: a percentage is added to the price of goods and services. The confusion comes when you need to go the other way, for example when a shop price already includes VAT and you want to know the price before it.
Choose whether to add tax or remove it, enter the rate, and the calculator shows the price before tax, the tax amount and the total. The quick buttons cover common rates, and you can type any rate you like.
Adding and removing tax
Remove tax: price before tax = total ÷ (1 + rate ÷ 100)
Tax amount = total − price before tax
The common mistake is to remove tax by subtracting the rate from the total. Taking 20% off a price that includes 20% VAT gives the wrong answer, because the VAT was calculated on the smaller, pre-tax price. Dividing by 1.20 gets it right.
Tax rates vary by country, and in some places by state or product type. Enter the rate that applies to your purchase. This tool does not look rates up.
A worked example
Example. Adding 8.5% sales tax to $100 gives $8.50 of tax and a total of $108.50. Going the other way, a price of 120 that includes 20% VAT contains 120 − 120 ÷ 1.2 = 20 of VAT, so the price before tax is 100.
Tax on a $100 price
| Tax rate | Tax on $100 | Total |
|---|---|---|
| 5% | $5.00 | $105.00 |
| 7.5% | $7.50 | $107.50 |
| 10% | $10.00 | $110.00 |
| 15% | $15.00 | $115.00 |
| 20% | $20.00 | $120.00 |
Adding tax to a $100 price. To go the other way, divide the total by 1 plus the rate.
Common mistakes to avoid
- Removing tax by subtracting the percentage. Taking 20% off 120 gives 96, but the price before 20% VAT is 100.
- Using the wrong rate. Rates differ by country, state and product type, so use the one printed on your receipt or invoice.
- Mixing tax-inclusive and tax-exclusive prices. Business prices are often quoted before tax and consumer prices after tax.
Frequently asked questions
How do I add VAT to a price?
Multiply the price by 1 plus the rate as a decimal. For 20% VAT on 100, multiply by 1.20 to get 120. The VAT is 20.
How do I remove VAT from a price?
Divide the total by 1 plus the rate as a decimal. For 120 with 20% VAT, divide by 1.20 to get 100. Do not just subtract 20% of 120.
What is the difference between sales tax, VAT and GST?
Sales tax is charged once, at the point of sale to the customer. VAT and GST are charged at each stage of the supply chain, with businesses reclaiming the tax they pay, and end up paid by the final customer. For a shopper, the arithmetic is identical.
Which tax rate should I use?
Use the rate printed on your receipt, invoice or on your tax authority website. Rates differ by country, region and sometimes by type of product.
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Sources and further reading
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