How the VAT and sales tax calculator works
Value-added tax (VAT) and sales tax are added on top of a base price. This tool handles three tasks:
- Add tax — enter the net price and the tax rate to get the gross price and the tax amount.
- Remove tax — enter the gross (tax-inclusive) price and the rate to extract the net price and the tax amount.
- Find tax rate — enter the net and gross prices to calculate the tax rate.
Example
A book costs $100 before tax and the rate is 20%. Tax = 100 × 0.20 = $20, so the total is $120.
A receipt shows $120 including 20% tax. Net = 120 ÷ 1.20 = $100, and the tax portion is $20.
Notes and assumptions
- The calculator works for any percentage-based tax, including US sales tax, EU VAT, Canadian GST/HST/QST, and Latin American IVA/ICMS.
- Removing tax uses exact division, so the extracted net and tax always add back up to the gross price.
- The net price cannot be zero when finding the tax rate, since dividing by zero is undefined.
Frequently asked questions
What is the difference between VAT and sales tax?
VAT is collected at every stage of production and ultimately paid by the consumer, while sales tax is collected only at the final point of sale. Both are percentage-based and use the same math.
How do I add two taxes together?
Add the percentages first, then apply the combined rate. A 5% state tax plus a 2% local tax is a 7% total rate.
Why is the tax amount different when I remove tax vs. add it?
Because the base changes. Adding tax to $100 at 20% gives $20 tax. Removing tax from $120 at 20% also gives $20 — they match when the rate is the same.
Does this calculator handle tax-inclusive pricing?
Yes. Use the Remove tax mode with the tax-inclusive price to find the pre-tax amount.