Home
Back
Sales Tax Formula:
| From: | To: |
This calculator helps determine how much of a total amount (price including tax) is the actual tax paid. This is useful when you know the total amount paid but need to determine the tax portion separately.
The calculator uses the following formula:
Where:
Explanation: The formula calculates the tax amount by determining what portion of the total amount represents the tax, given the tax rate.
Details: Proper tax calculation is essential for accounting, expense tracking, and understanding the true cost of goods and services before taxes.
Tips: Enter the total amount paid (including tax) and the tax rate as a percentage (e.g., 8.25 for 8.25%). The calculator will show both the tax amount and the original subtotal before tax was added.
Q1: Why use this formula instead of just multiplying total by tax rate?
A: When you have the total amount that already includes tax, you can't simply multiply by the rate because the tax is part of the total, not the base amount.
Q2: What's the difference between tax-inclusive and tax-exclusive pricing?
A: Tax-inclusive means the price includes tax (what this calculator works with). Tax-exclusive means tax is added to the displayed price.
Q3: How do I convert between tax-inclusive and tax-exclusive amounts?
A: To get tax-exclusive from tax-inclusive: Subtotal = Total / (1 + Rate). To get tax-inclusive from tax-exclusive: Total = Subtotal × (1 + Rate).
Q4: Does this work for VAT calculations?
A: Yes, this method works for any value-added tax or sales tax calculation where you need to extract the tax amount from a total.
Q5: What if I have multiple tax rates applied?
A: For multiple rates, you would need to know the proportion of each rate or calculate them sequentially from the subtotal.