Adding tax vs extracting tax
Extract: Net = Total ÷ (1 + rate ÷ 100)
Adding 8.875% (New York City's combined rate) to $100 gives $108.88. Going the other way, a receipt total of $108.88 at 8.875% means the pre-tax price was 108.88 ÷ 1.08875 = $100.00. The extraction step trips people up: you divide by 1.08875 — you don't subtract 8.875% of the total, which would give a slightly wrong answer.
Sales tax, VAT, and GST — what's the difference?
US sales tax is added at the register and varies by state, county, and city — from 0% (Oregon, Delaware, Montana, New Hampshire) to over 10% in parts of Louisiana and Alabama. VAT (Europe, UK at 20%, and most of the world) and GST (Australia 10%, India 5–28%) are usually already included in the displayed price, which is why the "extract" mode exists — it tells you how much of a quoted price is tax.
Typical combined rates
| Place | Typical rate |
|---|---|
| Oregon, USA | 0% |
| California, USA (base) | 7.25% |
| New York City, USA | 8.875% |
| UK (VAT) | 20% |
| Germany (VAT) | 19% |
| Japan (consumption tax) | 10% |
| Australia (GST) | 10% |
Rates change and vary by locality and product category. Verify the current rate with your local tax authority.
Frequently asked questions
How do I remove sales tax from a total?
Divide the total by (1 + rate as a decimal). A $54 total at 8% tax: 54 ÷ 1.08 = $50 pre-tax, so the tax was $4. Subtracting 8% of $54 instead would give $49.68 — close, but wrong.
Why does my US receipt show tax added while European prices don't?
US retailers advertise pre-tax prices because rates differ across thousands of jurisdictions. VAT countries require the displayed price to include tax, so what you see is what you pay.
What's the highest sales tax rate in the US?
Combined state and local rates exceed 10% in some areas — parts of Louisiana, Alabama, Arkansas, and Washington are among the highest. Five states charge no statewide sales tax at all.
Are groceries and clothing taxed?
It depends on the jurisdiction: many US states exempt or reduce tax on unprepared food and some exempt clothing under a threshold, while VAT systems often apply reduced rates to essentials. Category rules are the most common source of receipt surprises.
Is this calculator suitable for VAT invoices?
Yes — use 'Extract tax from total' with your VAT rate to split any tax-inclusive amount into net + VAT, which is exactly what you need when reclaiming VAT or issuing invoices from gross prices.