The two formulas
Worked example
A $250.00 price with 8% tax: the tax is $20.00 and the total is $270.00. Going the other way, a $270.00 total that includes 8% tax contains $20.00 of tax on a net price of $250.00.
The mistake to avoid when removing tax
You cannot take tax out by subtracting the rate from the total. A $120.00 total that includes 20% tax is not $120.00 minus 20%, which would be $96.00. The tax was 20% of the net price, not of the total. Dividing by 1.20 gives the right net price of $100.00 and $20.00 of tax.
Rounding
Results are rounded to two decimal places. On an invoice with several lines, tax worked out line by line can differ by a small amount from tax worked out on the invoice total. Tax authorities set their own rounding rules, so follow yours when you file.
Country pages
These pages have the local rates built in, with the official source for each:
- India GST calculator, with the CGST, SGST and IGST split
- UK VAT calculator
- Australia GST calculator
This page does not know your local rate. Rates differ by country, sometimes by state or city, and by product. Check with your tax authority.