Sales Tax Calculator
Two directions: add tax to a pre-tax price, or pull the tax out of a tax-included total (the one people always get wrong).
Add tax to a price
Remove tax from a total (reverse)
The reverse-tax trap
To remove 13% tax from a $113 total, you divide by 1.13 (giving $100) — you do not subtract 13% ($113 × 0.87 = $98.31, which is wrong). Subtracting the percentage applies it to the wrong base. This matters constantly for bookkeeping: receipts show tax-included totals, but your accounting records need the pre-tax amount and the tax as separate lines.
Common rates for reference
| Region | Tax | Typical rate |
|---|---|---|
| Canada (ON) | HST | 13% |
| Canada (AB) | GST only | 5% |
| Canada (BC) | GST + PST | 12% |
| US states | Sales tax | 0–~10% (state + local) |
| UK / EU | VAT | Mostly 17–27% (UK 20%) |
| Australia / NZ | GST | 10% / 15% |
Rates change and many places have exemptions (groceries, children's clothing, etc.) — always confirm the current rate for your jurisdiction and product category.
Why reverse tax matters for bookkeeping
Most receipts you collect as a business show only the tax-included total. Your books need three separate figures: the pre-tax expense, the tax paid, and the total. Getting this right isn't optional — in most VAT/GST systems, the tax you paid on business purchases (input tax) can be reclaimed against the tax you collected on sales (output tax), and you can only reclaim what you've correctly identified.
Worked example
A business buys supplies for $452.00 including 13% tax.
Pre-tax: $452.00 ÷ 1.13 = $400.00. Tax portion: $52.00.
The $400 is the deductible business expense; the $52 is reclaimable input tax. Recording the full $452 as an expense overstates costs and forfeits the $52 refund.
Multiply that across a year of receipts and the difference between careful and careless bookkeeping becomes substantial.
Tax-inclusive vs tax-exclusive pricing
Two conventions exist worldwide, and they shape customer expectations:
- Tax-exclusive (US, Canada) — shelf prices exclude tax; it's added at checkout. Visitors are routinely surprised when the total exceeds the marked price.
- Tax-inclusive (most of Europe, UK, Australia, Japan) — the displayed price is what you pay. Businesses must then work backwards to report the tax portion, which is exactly what the reverse calculator above is for.
If you sell internationally, this matters for pricing pages: quoting a tax-exclusive price to European consumers is often non-compliant as well as confusing.
Registration thresholds
Most jurisdictions only require sales tax registration above a revenue threshold. Below it, registration is typically optional — and the choice is a genuine trade-off:
- Registering voluntarily lets you reclaim input tax on purchases and equipment, which suits businesses with significant costs or mainly business customers (who reclaim the tax anyway).
- Staying unregistered keeps your prices effectively lower for consumers who can't reclaim, and avoids filing obligations.
Thresholds and rules change, and crossing one mid-year usually triggers registration within a short window. Check your own tax authority's current guidance — this is one area where acting on outdated information is expensive.
Common mistakes
- Subtracting the percentage to remove tax. $113 minus 13% is $98.31, not $100. Always divide by 1.13.
- Spending collected tax. Sales tax you collect was never revenue — it's held on the government's behalf. Set it aside as it arrives, or the filing deadline becomes a crisis.
- Applying one rate to everything. Many jurisdictions zero-rate or exempt categories such as basic groceries, prescription medication, or children's clothing.
- Charging the wrong region's rate. For shipped goods, tax often follows the customer's location rather than yours.