Sales Tax Calculator (Add Sales Tax)
Sales Tax Calculator (Subtract Sales Tax)
Definition – What is Sales Tax?
A sales tax is a tax that is collected for each transaction.
The tax applies to all transactions at the retail level. Unlike a VAT (value-added tax) or GST (goods and services tax), businesses who purchase items with sales tax cannot reclaim the sales tax.
Formula – How to calculate sales tax
Sales tax is calculated by multiplying the sales tax rate by the total pre-tax cost. The cost of sales tax is then added to the purchase.
Example: $75 of goods x 5% sales tax = $3.75 sales tax
$75 of goods + $3.75 = $78.95 total
Formula – How to calculate reverse sales tax
To find the sales tax from a total, divide the total amount by the sales tax rate divided by 100 and plus 1.
Example: $70 total (with sales tax) at 5% tax rate
(5% / 100) + 1 = 0.05 + 1 = 1.05
$70 / 1.05 = $66.67 cost before sales tax