How to Calculate Tax Revenue

Calculating your taxes doesn't have to be frustrating.

Calculating tax revenue is not difficult provided you know which tax rate to charge against a tax base. The tax rate is the legally defined percentage to be charged against the legally defined tax base. The tax base is the legally defined measure upon which the assessment or determination of tax liability is based. The total amount of taxes collected by the government for a specific tax is referred to as tax revenue. Anyone can compute tax revenue provided they have done the necessary research to identify the legally defined tax rate to be applied to the legally defined tax base.

Step 1

Research the tax you are analyzing. For instance, the current sales and use tax being charged in the State of New Jersey is 7 percent. This tax rate is legally defined under New Jersey statutory number 54:40B-1 to 14.

Step 2

Research the tax base upon which the tax is being applied. For instance, the current tax base for items subject to the New Jersey sales and use tax includes such items as retail sales, rentals or use of tangible personal property or digital property.

Step 3

Multiply the legally defined tax rate by the appropriate tax base. For instance, if you purchased a motor vehicle in the State of New Jersey for $13,000 you would end up paying a sales and use tax to the state in the amount of $910 ($13,000 X .07 = $910).

Step 4

Add each tax payment made during the legally defined tax collection period to arrive at total tax revenue. For instance, in 2013 the State of New Jersey collected a total of $8.235 billion in sales and use tax revenues which was approximately 30.5 percent of the $27 billion the state government collected from all taxes and fees for the same period.

Things You'll Need

  • Tax rate

  • Tax base

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