How to Calculate Sales Tax
Sales tax is added at the register, so the sticker price is rarely what you pay. Here is how to work out the final amount.
The formula
Sales tax = price × tax rate. Total price = price + sales tax. To use a percentage rate, divide it by 100 first. An 8.25% rate becomes 0.0825.
Example
You buy something for $250 and the sales tax rate is 8.25%. The tax is 250 × 0.0825 = $20.63 after rounding, and the total is $270.63. At a 7% rate, a $100 purchase has $7 of tax and costs $107 in total.
Working backward from the total
If you know the final price and want the price before tax, divide by 1 plus the rate. For a $270.63 total at 8.25%, divide by 1.0825 to get $250.
Why rates differ
In the United States, sales tax is set by states, and many counties and cities add their own. The combined rate at checkout is what matters. Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, although some local areas in Alaska charge their own. Many states also exempt some goods such as groceries or prescription medicine.
Online purchases
Since a 2018 Supreme Court decision (South Dakota v. Wayfair), states can require out-of-state sellers to collect sales tax from their residents. Online orders are often taxed based on where the item is delivered.
Common mistakes
- Using only the state rate and forgetting local taxes
- Applying a discount after tax when the store takes it before tax
- Rounding the tax too early on several items
Try it
Use our Sales Tax Calculator to get the tax and total instantly. To compare final prices after sales, use the Discount Calculator. For exact rates, check your state revenue department.