How to Figure Sales Tax When its Included in Price | Sapling

How to Figure Sales Tax When its Included in Price

How to Figure Sales Tax When its Included in Price
Written By
Art Corvelay
Art Corvelay
Mar 14, 2010
1 minute read
...
You must calculate sales tax on items with included tax.

Sales tax is a percentage of an item's price owed to a government entity, typically a state government. Sales tax percentage varies from state to state and municipality to municipality. If you are selling items, you may want to include the sales tax in the item's price to make the price a whole number. If you have priced your items with sales tax included, you'll need to figure out how much tax is owed on the items sold.

Step 1

Figure your total sales, writing down the total price of the item or items. For example, you may have sold an item for $100.

Step 2

Take your state or municipality's current sales tax rate and write it down. For example, a typical rate could be 5.75%.

Step 3

Add the current sales tax rate to 100 to come up with a new percentage. For example, if the rate is 5.75 percent, the resulting figure would be 105.75 percent. Divide the percentage by 100 before making any further calculations. In this example, the result is 1.0575.

Step 4

Divide your sales figure by the figure calculated in step 3. For example, $100 divided by 1.0575 percent equals $94.56. This is the price of the item without sales tax.

Step 5

Subtract the price you calculated in step 4 from the original price. In this continuing example, $100 minus $94.56 equals a sales tax total of $5.44.

Art Corvelay

Art Corvelay is a freelance writer for demand studios who has been writing and editing for five years. He holds a Ph.D. in technical communication and teaches courses in writing and editing at the university level.

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