Forward and reverse sales tax
The forward calculation is simple: multiply the price by the rate and add it on. The reverse calculation trips people up. To find the pre-tax price from a total, you divide by (1 + rate), not multiply by (1 − rate). A $108.88 receipt at 8.875% means the item was $100.00 — not $99.22, which is what you get if you subtract 8.875% of the total.
Reverse sales tax is what you need for expense reports, for pricing products so they land on a round total, and for checking whether a store applied the right rate.
Finding your sales tax rate
US sales tax is a combination of a state rate and, in most states, county, city and special-district rates. The combined rate is what appears on your receipt. State rates range from 0% (Delaware, Montana, New Hampshire, Oregon; Alaska has no state rate but allows local tax) to 7.25% in California, and combined rates in some cities exceed 10%. New York City is 8.875%; Chicago is 10.25%; Seattle is around 10.35%.
Your state department of revenue publishes rate lookups by address, and any recent receipt from a local store shows the rate you're actually paying.
What's usually exempt
Most states exempt unprepared groceries and prescription drugs; many also exempt clothing below a threshold (New York exempts items under $110) or hold annual sales-tax holidays for back-to-school shopping. Services are taxed in some states and not others. Online purchases are now taxed by nearly every state at the rate of your delivery address.
Forward and reverse
Total = Price × (1 + rate) · Price = Total ÷ (1 + rate)
- rate = combined state + local rate as a decimal (8.875% → 0.08875)
Frequently asked questions
+How do I calculate sales tax backwards?
Divide the total by one plus the rate as a decimal. For a $54.25 total at 8.5%, the pre-tax price is $54.25 ÷ 1.085 = $50.00, and the tax is $4.25. Select "Total after tax (reverse)" above to do this automatically.
+Which states have no sales tax?
Delaware, Montana, New Hampshire and Oregon have no state or local sales tax. Alaska has no state sales tax but some municipalities charge their own.
+Is sales tax charged on shipping?
It depends on the state. Many states tax shipping when the items shipped are taxable; some exempt separately stated shipping charges. Check your state's rules if you sell online.
+Do I pay sales tax on a used car from a private seller?
In most states, yes — the DMV collects it when you register the vehicle, based on the purchase price or book value. A handful of states exempt private-party sales.