How Reverse Sales Tax Works
A comprehensive guide to the reverse tax formula, algebraic derivation, and practical bookkeeping examples.
3 Simple Steps
Calculate your pre-tax price in seconds — no account required.
Enter the Total Price
Type in the full amount you paid — the price including tax that appears on your receipt or invoice.
Select or Enter the Tax Rate
Choose your US state for the combined rate, or enter any custom rate. You can also use our quick-select buttons for common rates.
Get Your Results Instantly
Click calculate and instantly see the original pre-tax price, the exact tax amount paid, and a complete breakdown.Once you understand the formula, return to the reverse tax calculator to apply it instantly to any receipt total without manual calculation.
The Mathematics Behind Reverse Tax
Why Not Just Subtract the Percentage?
The most frequent mistake in retail accounting is the "percentage subtraction error." For example, if you paid $107.50 with a 7.5% tax rate: calculating $107.50 × 7.5% = $8.0625 and subtracting it produces $99.44. This is mathematically wrong.
The real original price was $100.00. The reason is simple: sales tax was originally levied on the pre-tax base ($100.00), not the final gross amount ($107.50). Because $100.00 × 7.5% = $7.50, you must use the mathematical inverse: division.
Step-by-Step Worked Example
Reverse Tax Divisor Quick Reference
| Tax Rate | Divisor Factor | $100 Receipt Pre-Tax Cost |
|---|---|---|
| 5.00% | 1.050 | $95.24 |
| 6.00% | 1.060 | $94.34 |
| 6.25% (MA/TX base) | 1.0625 | $94.12 |
| 7.00% (NC/MS) | 1.070 | $93.46 |
| 8.25% (TX city max) | 1.0825 | $92.38 |
| 8.875% (NYC) | 1.08875 | $91.85 |
| 10.00% | 1.100 | $90.91 |
| 13.00% (Ontario HST) | 1.130 | $88.50 |
| 20.00% (UK VAT) | 1.200 | $83.33 |