How to Calculate Sales Tax: Formula and Examples
Learn how to calculate sales tax in seconds with one simple formula, worked examples at 6%, 7.25% and 8.5%, and a quick reference table.
Sales tax is added to the price of most goods and many services at checkout. If you run a shop, send invoices or just want to check a receipt, you only need one formula to work it out.
Sales tax = price × tax rate
Total = price + sales tax
Step by step
- Convert the rate to a decimal. Divide the percentage by 100. A 7.25% rate becomes 0.0725.
- Multiply the price by that decimal. The result is the sales tax.
- Add the tax to the price. That is what the customer pays.
- Round to the nearest cent.
You can also do it in one step: multiply the price by 1 plus the rate. At 6%, multiply by 1.06.
Want to try it right away? Sales Tax Calculator is free and needs no signup.
Worked examples
| Price | Tax rate | Sales tax | Total |
|---|---|---|---|
| $80.00 | 6% | $4.80 | $84.80 |
| $249.99 | 7.25% | $18.12 | $268.11 |
| $1,200.00 | 8.5% | $102.00 | $1,302.00 |
For the middle row, 249.99 × 0.0725 = 18.1243, which rounds to $18.12.
Quick reference at a 7% rate
| Price | Sales tax | Total |
|---|---|---|
| $50 | $3.50 | $53.50 |
| $100 | $7.00 | $107.00 |
| $250 | $17.50 | $267.50 |
| $500 | $35.00 | $535.00 |
Which rate should you use?
In the United States, sales tax is set by states and often by counties and cities too, so the combined rate depends on where the sale takes place. Rates and the list of taxable items change, so confirm the current rate with your state's revenue department before you charge it. Some states have no statewide sales tax, and many exempt items such as certain groceries.
Common mistakes
- Using the wrong rate. Check the combined state and local rate for the right location.
- Forgetting to round. Sales tax is rounded to the cent.
- Taxing the wrong amount. Sales tax is usually calculated on the price after a store discount, but rules vary by state and by type of coupon.
FAQ
How do I calculate 8% sales tax on $50?
Multiply 50 by 0.08 to get $4.00 in tax. The total is $54.00.
How do I convert a percentage to a decimal?
Divide it by 100, or move the decimal point two places to the left. 6.5% becomes 0.065.
How do I work out the price before tax?
Divide the total by 1 plus the tax rate. For example, $107 divided by 1.07 is $100. See how to remove sales tax from a total.
Is this tax advice?
No. This guide explains the math. For rules about what is taxable and which rate applies, check with your state tax agency or an accountant.