Whether you are budgeting for a big purchase, checking a receipt or setting prices for a small business, sales tax comes down to two formulas. The only tricky part is using the right rate.
The short version
- Tax = price × rate. $50 at 6.5% is $3.25.
- Total = price × (1 + rate). $50 at 6.5% is $53.25.
- Pre-tax price = total ÷ (1 + rate). Never subtract the percentage from the total.
- Use the combined rate where you buy: state plus any city, county or transit tax.
Step 1: Find the right rate
The rate you pay is usually the state rate plus local rates where the sale happens (or where the item is delivered). In Washington, the state rate is 6.5%, but Seattle’s combined rate is 10.55% and Tukwila’s is 10.4%. In North Carolina, the state rate is 4.75%, and county rates bring most places to 6.75% or 7%.
Look up a state on our sales tax by state page, or a Washington city or North Carolina county on our local sales tax pages.
Step 2: Calculate the tax
Turn the rate into a decimal by dividing by 100, then multiply by the price.
Example
A $249.99 TV in Texas at the 6.25% state rate: 249.99 × 0.0625 = $15.62 tax, for a total of $265.61. If your city adds local tax, use the combined rate instead.
Step 3: Get the total in one step
Multiply the price by 1 plus the rate. At 10.55% in Seattle, multiply by 1.1055. A $40 purchase becomes 40 × 1.1055 = $44.22.
Working backward from a receipt total
Suppose a receipt says $107.25 and you know the rate was 7.25%. To find the price before tax, divide the total by 1.0725: 107.25 ÷ 1.0725 = $100.00. The tax was $7.25.
The common mistake is to take 7.25% off the total: 107.25 × 0.9275 = $99.47, which is wrong by 53¢. The tax was calculated on the pre-tax price, so you have to divide.
Example: a small business
Aisha runs an online craft shop in Charlotte, North Carolina, where Mecklenburg County’s combined rate is 8.25%. A customer’s card was charged $64.95 including tax. Her pre-tax sale was 64.95 ÷ 1.0825 = $60.00, and $4.95 was tax she needs to remit.
Quick reference: tax on $100 at common rates
| Rate | Tax on $100 | Total |
|---|---|---|
| 4% (New York state rate) | $4.00 | $104.00 |
| 6% (Florida) | $6.00 | $106.00 |
| 6.25% (Texas) | $6.25 | $106.25 |
| 7% (North Carolina counties with a 2.25% local rate) | $7.00 | $107.00 |
| 7.25% (California state base) | $7.25 | $107.25 |
| 10.55% (Seattle) | $10.55 | $110.55 |
Things that change the answer
- Exempt items. Many states exempt or tax groceries and prescription drugs at a lower rate.
- Discounts and coupons. Store discounts usually reduce the taxable price; some manufacturer coupons may not. Rules vary by state.
- Shipping. Some states tax delivery charges, others don’t.
- Special taxes. Hotels, rental cars, prepared food and vehicles often carry extra taxes.
- Rounding. Tax is rounded to the cent, usually on the total of the receipt, so line-by-line math can be off by a cent or two.
Our sales tax calculator adds or removes tax for any rate, and our percentage calculator handles the general math.
One purchase, different cities
| Where in Washington | Combined rate | Tax on $500 | Total |
|---|---|---|---|
| Lynnwood | 10.7% | $53.50 | $553.50 |
| Seattle | 10.55% | $52.75 | $552.75 |
| Spokane | 9.1% | $45.50 | $545.50 |
| Yakima | 8.6% | $43.00 | $543.00 |
The same $500 purchase costs $10.50 more in Lynnwood than in Yakima, entirely because of local tax.
Working backward: a quick table
| Total paid | Rate | Price before tax | Tax |
|---|---|---|---|
| $53.25 | 6.5% | $50.00 | $3.25 |
| $108.25 | 8.25% | $100.00 | $8.25 |
| $221.10 | 10.55% | $200.00 | $21.10 |
For small sellers
If you sell things, you may be required to register with your state, collect sales tax at the right rate and send it in on a schedule. Which rate applies, especially for items shipped to customers in other places, depends on state rules. Your state’s department of revenue explains registration and filing; a tax professional can help with sales across state lines.
