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Sales Tax Calculator
Sales tax forms an integral part of our lives. Whether you are purchasing something as large as shares in
the stock market, or something as small as candy from the supermarket, you will be paying sales tax. For
large purchases, understanding sales tax is a necessity, and for smaller ones, it’s a bonus.
Let’s define the Sales Tax Calculator
To fully understand the sales tax calculator, let’s start by discussing our main term: sales tax.
What is the sales tax?
Simply put, sales tax is a percentage of the price of an item/share that is paid to a governing body in
addition to the original price.
As an example, the sales tax on an item is 10% of the total price. If the item is priced at $50, this means
you will be paying ten percent of this price, that is (10/100)*50 = $5. Henceforth, you would be charged a
total of $55, and this value will be called ‘inclusive of tax’ – a concept we will introduce later.
Sales tax is mostly collected at the time of payment. From our previous example, the cashier will calculate
the tax in dollars for you at check-out (i.e. $5). You will then pay the price of the chocolate bar and the
added tax together (that is, a total of $55).
What is the function of a sales tax calculator?
At times, you want to calculate the sales tax for large investments you are willing to make, for example,
purchasing stocks in the stock market.
At other times, you may want to double-check the tax charged on items you’ve bought at the
supermarket, or you may even want to figure what percentage of the price you are paying as tax.
In all the above scenarios – and plenty others – our sales tax calculator will make things simpler for you.
By simply adding in all the values, you can calculate sales tax. Alternatively, you can manually calculate
the sales tax – our next area of focus.
Sales Tax Formula
Sales tax can either be GST (goods and services) or VAT (value-added tax). It can be calculated using
the series of equations given below.
where sales tax percentage is equivalent to:
The above equations can be replaced by one concise formula:
To find the total amount you will be paying, use the sales tax obtained in the following equation:
In the equations above, the parameters involved are your input. Let’s discuss them in further detail now.
- Sales Tax: The tax you will be paying in addition to the original price
- Sales Tax Percentage: The tax expressed as a percentage of the price
- Net price: The original price of the item or share
How to calculate sales tax
You can calculate sales tax using the automatic calculator we have provided. Here, the amount refers to
the net price, and the tax rate means the percentage of tax imposed. Let’s now discuss the two further
terms, Tax exclusive and Tax inclusive.
Simply, this means that the ‘amount’ (price) you are entering does NOT include the tax. This will direct the
calculator to calculate the added tax and combine it with the price before displaying it.
Considering manual calculations, tax exclusive can be calculated using the formulas given under our
heading ‘Sales Tax Formula’. You will input the price that does not include tax along with the tax rate. The
calculator will then do some math – basically the formulas we’ve discussed – and display the final result
as a price that includes the tax.
The term ‘tax inclusive’ means that the amount you are entering is a price already including the tax (in
addition to the tax rate as a percentage).
The function of the calculator is now reversed; it will extract the tax amount from the given price using the
the percentage you provided and will display the original price and the price gone in tax separately.
You can do this manually as well. Firstly, the original price will be calculated as:
The tax amount will then be deduced by:
In the above equations, the terms used can be described as follows:
- Original price: The price that the product is originally priced at (price without tax)
- Price: The price inclusive of tax i.e. the amount you will be entering in our calculator
- Tax as a percentage: The tax imposed on the product as a percentage
- Tax amount: The amount of tax imposed on the product
The Sales Tax calculator can be used to deduce the amount you have been or will be paying in tax – the
term ‘tax inclusive’ used for the former situation and ‘tax exclusive’ for the latter. You can perform these
calculations either manually using the formulas we’ve provided, or in the blink of an eye using our Sales