How to calculate sales tax
Adding tax to a price: multiply the net price by the tax rate, then add it on. At 8.25%, a $100 item has $8.25 of tax and costs $108.25 in total. Shortcut: multiply by 1.0825.
Removing tax from a total (reverse sales tax): divide the gross amount by (1 + rate). A $108.25 receipt at 8.25% tax: $108.25 ÷ 1.0825 = $100.00 net, so the tax was $8.25. This is the calculation you need when a receipt shows only the total and you want to claim the tax back or record the net expense.
Sales tax vs VAT vs GST
- Sales tax (USA) is charged only on the final sale to the consumer. Rates are set by states, counties and cities, so the combined rate can range from 0% (Oregon, Montana, New Hampshire, Delaware) to over 10% in some localities. Prices are usually shown before tax.
- VAT (EU, UK and 170+ countries) is charged at every stage of the supply chain, and businesses reclaim the VAT they paid on purchases. Consumer prices are usually shown including VAT. Standard rates: UK 20%, Germany 19%, France 20%, Ireland 23%.
- GST works like VAT. Australia 10%, New Zealand 15%, Singapore 9%, India 5–28% depending on the goods, Canada 5% federal plus provincial tax.
Sales tax on invoices
If you are registered to collect sales tax, VAT or GST, show it as a separate line on every invoice with the rate and your registration number. The invoice generator has a tax rate field that does this automatically. If you are below the registration threshold, do not charge tax – but check the threshold in your jurisdiction, since several countries require registration once sales to their residents exceed a limit, even for foreign sellers.
Combining US state and local rates
US sales tax is the sum of the state rate plus any county, city and special-district rates at the point of sale (or, for shipped goods, usually the delivery address). Look up the combined rate for the exact address on your state's department of revenue website and enter the total in the calculator – for example 6.25% state + 2% local = 8.25%.
Frequently asked questions
How do I calculate tax backwards from a total?
Divide the total by (1 + tax rate as a decimal). For a $54 total at 8% tax: $54 ÷ 1.08 = $50 net, $4 tax. Select "Amount includes tax" in the calculator.
What is 7% sales tax on $250?
$17.50. Total with tax is $267.50.
Is shipping taxable?
In many US states, yes, if the goods being shipped are taxable. VAT countries generally treat delivery as part of the taxable supply. Check your local rules.
Does this calculator work for VAT and GST?
Yes. The maths is identical – enter the VAT or GST rate as the tax rate. Use the "includes tax" option for VAT-inclusive prices.