How it’s calculated
Sales tax is the purchase price times the local tax rate. To reverse it, divide the total by (1 + rate). Subtracting the rate from the total (total × (1 − rate)) is a common mistake and gives the wrong pre-tax price.
Example (OpenStax Contemporary Mathematics, Example 6.22): a 34.88 purchase at 8.25% has tax 34.88 × 0.0825 = 2.88, for a total of 37.76. Reverse (Example 6.26): a 467.64 total at 8.25% came from 467.64 ÷ 1.0825 = 432.00, so the tax included was 35.64.
This is general arithmetic for a single rate. It does not determine which items are taxable or what tax you owe; check your state or local revenue department.
Frequently asked questions
How do I calculate the price before tax?
Divide the total by 1 plus the tax rate as a decimal. At 8.25%, a 108.25 total ÷ 1.0825 = 100.00 before tax.
Why not just subtract the tax percentage from the total?
Because the tax was calculated on the pre-tax price, not on the total. 108.25 × (1 − 0.0825) = 99.32, which is 0.68 too low.
What sales tax rate should I use?
Use the combined state, county and city rate for the place of sale. Your state revenue department publishes official rates; many items (like groceries) may be taxed differently.
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Sources
- Contemporary Mathematics, 6.2: Discounts, Markups, and Sales Tax — OpenStax
- Prealgebra 2e, 6.3: Solve Sales Tax, Commission, and Discount Applications — OpenStax
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
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