Sales Tax Calculator Guide: How Tax Is Added
Sales tax is a percentage added to most retail purchases. The exact rate depends on where you buy — in the US, it varies by state, county, and even city, and five states charge no sales tax at all. This guide explains how to add tax to a price and how to work backwards from a tax-included total.
Adding Tax to a Subtotal
- Subtotal — price before tax
- rate — sales tax rate as a decimal (7.5% = 0.075)
Tax amount = Subtotal × rate.
Example: a $100 item in a 7.5% area costs 100 × 1.075 = $107.50, of which $7.50 is tax.
Extracting Tax From a Total
If you only know the final (tax-included) price and need the pre-tax subtotal, divide instead of multiply:
This is useful for receipt reconciliation and accounting.
Example: a $107.50 total in a 7.5% area means the subtotal was 107.50 ÷ 1.075 = $100.00.
US State Sales Tax Varies Widely
- No state sales tax: Delaware, Montana, New Hampshire, Oregon, Alaska (though local taxes may apply).
- Highest state rates: California (7.25%), Indiana, Mississippi, Rhode Island, Tennessee (7%).
- Combined rate: many cities and counties add their own tax on top, so the real rate you pay can be 9–10%+ in places like Los Angeles or Chicago.
Groceries are tax-exempt or reduced-rate in many states; clothing is exempt in Pennsylvania, New York (under $110), and others. Always check local rules.
Put It Into Practice
Enter any subtotal and tax rate to see the tax amount and total, or toggle to reverse-extract the subtotal from a final price.