VAT, GST & Sales Tax Calculator
Add tax to a price, or take it back out of one that already includes it. Those are two different sums, and treating them as one is the mistake this calculator exists to prevent.
The two sums, and why they differ
Adding is not the reverse of extracting
Adding is straightforward: the tax is the rate applied to the price, and the total is the price plus that.
tax = net × rate gross = net × (1 + rate)
Taking it back out is not the rate applied to the total. At 20%, a £120 inclusive price contains £20 of tax, not £24 — because the £20 is 20% of the £100 underneath, not of the £120 on the label. The net has to be derived first.
net = gross ÷ (1 + rate) tax = gross − net
The error is worth about 3.3% of the total at a 20% rate, and it goes unnoticed easily because the answer looks plausible.
These are not all the same tax
VAT, GST, HST and sales tax are charged at different points and behave differently, even where the arithmetic on a single price looks identical. VAT and GST are charged at each stage of production with businesses reclaiming what they paid, so the tax reaches the state gradually. A US sales tax is charged once, at the final sale.
The practical consequence is that a US rate is not a single national figure. It is a state rate plus, very often, a county rate, a city rate and sometimes a transit or stadium district rate on top, and it varies between neighbouring towns.
So the United States is handled here in two halves. Twenty-one state rates are carried, each read from that state's own revenue department with the sentence it came from, along with the five states that levy no state sales tax at all — Alaska, Delaware, Montana, New Hampshire and Oregon. The local part is a field you fill in, because it depends on the exact address and changes quarterly, which is why every state runs an official lookup for it. Where a state's rate is not carried, the tool says so plainly rather than guessing: that is a statement about this tool, not about that state.
One consequence worth knowing if you are shopping rather than filing: sales tax is added at the register, not included on the shelf label. That is the reverse of VAT, where the price you see is the price you pay. It is also why the extract direction matters in America mainly for reading a receipt or reconciling a till, rather than for working out what something costs.
Where a state rate is a floor rather than an answer
A state base rate on its own is the right answer in very few places. Kentucky has no local sales taxes at all, so its 6% is the whole story. Most states are not like that: California's 7.25% base picks up a district tax of 0.10% to 2.00% almost everywhere, Texas allows up to 2% of local tax for a maximum of 8.25%, and Ohio caps the combined state, county and transit rate at 8.75%.
That is why the state rate and the local rate are separate boxes here rather than one. A single figure would invite you to accept the state rate as the answer, and in most of the country it is several percent short.
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