Calculate reverse sales tax

How to Calculate Reverse Sales Tax

Reverse sales tax calculation is essential for understanding the pre-tax price of an item, especially when you know the final price and the sales tax rate applied. Many businesses and consumers find themselves in situations where they need to calculate the pre-tax amount in order to understand the true value of a product or service. If you’re looking to reverse engineer a sales tax calculation, it’s easy to do with the right formula. Below, you’ll find a helpful guide and a reverse sales tax calculator to make the process faster and more accurate.

Reverse Sales Tax Calculator

Enter Final Price (Including Tax):


Enter Sales Tax Rate (as %):


Calculate Pre-Tax Price

How the Reverse Sales Tax Formula Works

To calculate reverse sales tax manually, you can use the following formula:

Pre-Tax Price = Final Price / (1 + Sales Tax Rate)

Here’s a breakdown of each part of the formula:

• Final Price: The total price that you paid, including sales tax.
• Sales Tax Rate: The percentage of sales tax that was added to the original price.
• Pre-Tax Price: The amount of the product before any sales tax was applied.

For example, if you bought an item for $120, and the sales tax rate was 20%, the pre-tax price would be $100. You can use the reverse sales tax calculator above to easily calculate the pre-tax price for any given final price and tax rate.

Why Use Reverse Sales Tax Calculations?

Reverse sales tax calculations are particularly useful for businesses looking to break down the cost of an item before tax for financial reporting or auditing purposes. Consumers also use this calculation when they want to know how much they are actually paying for a product before tax. It’s a simple, yet powerful tool that helps you gain a better understanding of the true cost of goods and services.