Adding tax to a price
Tax = net price × rate ÷ 100
Gross price = net price × (1 + rate ÷ 100)
An item priced at 249.99 with 8.25% sales tax: tax = 249.99 × 0.0825 = 20.62, and the total is 249.99 × 1.0825 = 270.61.
Removing tax from a tax-inclusive price
This is where most mistakes happen. To find the price before tax, divide by (1 + rate). Do not subtract the rate from the gross price.
Net price = gross price ÷ (1 + rate ÷ 100)
Tax included = gross price − net price
A receipt of 120.00 including 20% VAT: net = 120 ÷ 1.20 = 100.00, VAT = 20.00. Taking 20% off 120 would give 96.00, which is wrong, because the 20% was charged on 100, not on 120.
Another example: 59.50 including 19% VAT (the German standard rate) is 59.50 ÷ 1.19 = 50.00 net plus 9.50 VAT.
How much of a tax-inclusive price is tax?
The tax share of a gross price is rate ÷ (100 + rate). Handy fractions for common rates:
| Rate | Tax share of gross price | Shortcut | Tax inside 100.00 |
|---|---|---|---|
| 5% | 4.76% | 1/21 | 4.76 |
| 9% | 8.26% | 9/109 | 8.26 |
| 10% | 9.09% | 1/11 | 9.09 |
| 15% | 13.04% | 3/23 | 13.04 |
| 19% | 15.97% | 19/119 | 15.97 |
| 20% | 16.67% | 1/6 | 16.67 |
So for 20% VAT, a sixth of the shelf price is tax; for 10% GST, an eleventh.
Sales tax vs VAT and GST
- Sales tax (United States) is charged once, at the final sale, and is normally added at the till, so shelf prices exclude it. There is no federal sales tax; states, counties and cities set their own rates. Five states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no statewide sales tax, although Alaska allows local sales taxes.
- VAT (value added tax) and GST (goods and services tax) are collected at each stage of production, with businesses reclaiming the tax they paid on inputs. For consumers, the tax is almost always already included in the displayed price.
Standard rates in some countries
| Country | Tax | Standard rate |
|---|---|---|
| United Kingdom | VAT | 20% |
| Germany | VAT (MwSt) | 19% |
| France | VAT (TVA) | 20% |
| Australia | GST | 10% |
| New Zealand | GST | 15% |
| Singapore | GST | 9% |
| Japan | Consumption tax | 10% (8% reduced rate for most food) |
| Canada | GST | 5% federal, plus provincial sales tax or a combined HST in some provinces |
Many countries also have reduced rates for food, books, medicine or public transport. Rates change, so check the tax authority's website for the current figure before relying on it for invoices.
Common mistakes
- Removing VAT by subtracting the rate (120 − 20% = 96) instead of dividing (120 ÷ 1.2 = 100).
- Adding the tax rate twice when a price already includes VAT.
- Rounding each line differently from the total. Invoices can differ by a cent depending on whether tax is rounded per line or on the total; follow your local rules or accounting software.
What can I spend before tax?
If you have a fixed budget that must cover the tax as well, divide the budget by (1 + rate). With 500.00 to spend and 8.25% sales tax, the highest shelf price you can afford is 500 ÷ 1.0825 = 461.89. Choose "Including tax (remove tax)" in the calculator and enter your budget to get the same answer.
Combined state and local rates
In the US, the rate charged at the till is usually the state rate plus county, city or district rates. These are added together, not applied one after another. A 6% state rate and a 2.5% local rate give a combined 8.5%, so enter 8.5 in the calculator. Whether shipping, services or groceries are taxed also differs between states, so a receipt can show tax on some lines and not others.
Business invoices
Businesses registered for VAT or GST normally show the net amount, the rate and the tax separately on each invoice, and reclaim the tax they pay on purchases. If you need to issue invoices, follow the format required by your tax authority and keep the calculator's net and tax figures to two decimal places.
Frequently asked questions
How do I remove 20% VAT from a price?
Divide by 1.20. A price of 120.00 including 20% VAT is 100.00 before VAT, with 20.00 of VAT. Subtracting 20% would wrongly give 96.00.
How do I add sales tax to a price?
Multiply the price by (1 + rate ÷ 100). 249.99 with 8.25% tax is 249.99 × 1.0825 = 270.61.
What fraction of a VAT-inclusive price is VAT?
Rate ÷ (100 + rate): one sixth at 20%, one eleventh at 10%, about 15.97% at 19%.
Is sales tax the same as VAT?
No. US sales tax is charged once at the final sale and added at the till. VAT and GST are collected at each stage and usually included in shelf prices.
How do I find the price before tax from my budget?
Divide the budget by (1 + rate). With 500.00 and 8.25% tax, the most you can spend before tax is 461.89.
Sources
- HM Revenue & Customs (UK), VAT rates on goods and services.
- European Commission, VAT rates in EU member states.
- Australian Taxation Office, GST basics; Inland Revenue Department (New Zealand), GST.
- Inland Revenue Authority of Singapore, GST rate; Canada Revenue Agency, GST/HST rates.
- National Tax Agency (Japan), consumption tax and reduced tax rate system.
Last reviewed 6 October 2026. Results are estimates; see our disclaimer.