Sales tax is a percentage added to the price of goods at checkout. Knowing how to compute it keeps your budget accurate and lets you check receipts.
The sales tax formula
Tax amount = Price × (rate ÷ 100)
Total = Price + Tax amount
Or in one step: Total = Price × (1 + rate ÷ 100)
How to calculate sales tax step by step
- Find your local rate — for example 8.25%.
- Divide the rate by 100: 8.25 ÷ 100 = 0.0825.
- Multiply the price by that decimal: $60 × 0.0825 = $4.95 tax.
- Add it to the price: $60 + $4.95 = $64.95 total.
Reverse: finding the tax inside a total
If a receipt shows $64.95 total and you know the rate is 8.25%:
- Pre-tax price = Total ÷ (1 + rate) = 64.95 ÷ 1.0825 = $60.00
- Tax = 64.95 − 60.00 = $4.95
This reverse formula is how businesses split tax out of gross receipts.
Things to watch
- Rates vary by location — state, county and city taxes stack, so combined rates often differ across a single metro area.
- Not everything is taxed — groceries, prescriptions and clothing are exempt in many states.
- Tip is not tax — restaurant tips are calculated on the pre-tax subtotal.
A worked example
A $249 laptop bag in a 7% area: 249 × 0.07 = $17.43 tax → $266.43 at the register.
Put it into practice
Run any percentage question instantly with the free Percentage Calculator, and split a restaurant bill with the Tip & Bill Split Calculator.
