How to Calculate the Price Before Sales Tax (Remove Tax From a Total)
Find the pre-tax price from a receipt total with one division. Includes the common mistake that gives the wrong answer, and three worked examples.
You have a receipt total and want to know the price before tax, for an expense report, a refund or your bookkeeping. The fix is a division, not a subtraction.
Price before tax = total ÷ (1 + tax rate)
Tax amount = total − price before tax
Worked examples
| Total paid | Tax rate | Calculation | Price before tax | Tax |
|---|---|---|---|---|
| $108.25 | 8.25% | 108.25 ÷ 1.0825 | $100.00 | $8.25 |
| $53.50 | 7% | 53.50 ÷ 1.07 | $50.00 | $3.50 |
| $87.42 | 6.5% | 87.42 ÷ 1.065 | $82.08 | $5.34 |
Want to try it right away? Sales Tax Calculator is free and needs no signup.
The mistake that gives the wrong answer
Many people take the tax rate off the total. That does not work, because the tax was calculated on the smaller, pre-tax price.
With a total of $108.25 and 8.25% tax:
- Wrong: 108.25 − (108.25 × 0.0825) = 108.25 − 8.93 = $99.32
- Right: 108.25 ÷ 1.0825 = $100.00
The wrong method is off by 68 cents, and the gap grows with bigger amounts and higher rates.
Step by step
- Convert the rate to a decimal (8.25% becomes 0.0825).
- Add 1 to it (1.0825).
- Divide the total by that number.
- Subtract the result from the total to find the tax.
When you need this
- Filling in an expense report that needs the net amount.
- Recording purchases in your books.
- Checking that a store or supplier charged the right amount of tax.
- Splitting a tax-inclusive price on an invoice.
A calculator that adds or removes tax saves you from typing these divisions by hand. Enter the amount and the rate and choose "remove tax".
FAQ
How do I remove 7% tax from a total?
Divide the total by 1.07.
Why can't I just subtract the percentage?
Because the tax is a percentage of the price before tax, not of the total. Dividing by 1 plus the rate reverses it exactly.
How do I find the tax amount from a total?
Subtract the pre-tax price from the total, or multiply the total by the rate divided by 1 plus the rate.
Does this work for VAT too?
Yes. VAT-inclusive prices work the same way. For 20% VAT, divide by 1.20.