Whether you’re buying groceries, running an online business, or managing invoices, knowing how to calculate with tax is an essential skill.
This guide walks you through how to add tax to a price and how to remove tax from a total, with examples and a calculator.
Table of Contents
🙋♀️ What Does “With Tax” Mean?
A price with tax includes the original price of the item plus a percentage added as sales tax or value-added tax (VAT). This rate varies depending on your country or region.
For example, if an item costs $100 and the tax rate is 13%, the price with tax is:
$100 + ($100 × 13%) = $113✏️ How to Add Tax to a Price
Here’s the formula:
Final Price = Original Price × (1 + Tax Rate)Example:
Original Price = $75
Tax Rate = 10% = 0.10
Final Price = 75 × (1 + 0.10) = 75 × 1.10 = $82.50🔄 How to Remove Tax from a Price
If you know the total price including tax, you can find the original price like this:
Original Price = Total Price ÷ (1 + Tax Rate)Example:
Total Price = $113
Tax Rate = 13% = 0.13
Original Price = 113 ÷ 1.13 ≈ $100
📦 When to Use Tax Calculations
- Consumers: To estimate the final price when shopping
- Business owners: To create accurate invoices
- Freelancers: To understand how much tax you’re collecting
- Accountants: To break down totals for reporting
💡 Pro Tips
- Always convert percentages to decimals in calculations (e.g., 15% = 0.15)
- Use a calculator for quick and error-free results
- Confirm your local tax rate—many regions have different rates for different items