Last updated: November 12, 2026
To calculate sales tax, convert the tax rate to a decimal and multiply it by the price before tax. For example, a $50 item at an 8.25% rate has $50 × 0.0825 = $4.13 in sales tax, so you pay $54.13. To find the total in one step, multiply the price by 1 plus the rate.
This guide covers the sales tax formula, worked examples, how to calculate sales tax backwards from a total, how to find your combined rate, and current state rates.
Contents
- What is the formula for sales tax?
- How to calculate sales tax, step by step
- How to calculate sales tax backwards from a total
- How to find your combined sales tax rate
- Sales tax rates by state in 2026
- Common sales tax mistakes
- Frequently asked questions
What is the formula for sales tax?
The sales tax formula has two parts. OpenStax, a free college math textbook from Rice University, gives them as (OpenStax):
- Sales tax = purchase price × tax rate
- Total price = purchase price × (1 + tax rate)
The rate must be written as a decimal. Divide the percentage by 100, or move the decimal point two places to the left: 6% becomes 0.06, 7.25% becomes 0.0725 and 8.875% becomes 0.08875. If you need a refresher on percentages, see how to calculate a percentage, with formulas and examples.
How to calculate sales tax, step by step
- Find the taxable price. Start with the price of the taxable items. Leave out items your state exempts, and take off store discounts that lower what you pay.
- Find the combined rate. Add the state rate and any local rates for the place of sale (see how to find your rate below).
- Convert the rate to a decimal. For example, 8.25% ÷ 100 = 0.0825.
- Multiply. Price × decimal rate = sales tax. $50 × 0.0825 = $4.125.
- Round to the nearest cent. OpenStax notes that normal rounding applies: round up for half a cent or more and down for less (OpenStax). $4.125 rounds to $4.13.
- Add the tax to the price. $50.00 + $4.13 = $54.13.
Sales tax examples
| Price before tax | Rate | Sales tax (price × rate) | Total |
|---|---|---|---|
| $20.00 | 6% | $1.20 | $21.20 |
| $50.00 | 8.25% | $4.13 | $54.13 |
| $100.00 | 7% | $7.00 | $107.00 |
| $249.99 | 9.5% | $23.75 | $273.74 |
| $1,250.00 | 8.875% | $110.94 | $1,360.94 |
Sales tax on a discounted item
Apply the discount first, then the tax. An $80 item that is 25% off costs $60. At a 7% rate, the tax is $60 × 0.07 = $4.20 and the total is $64.20. Rules for manufacturer coupons, shipping charges and trade-ins differ by state, so check your state revenue department when those apply.
How to calculate sales tax in Excel or Google Sheets
Put the price in cell A2 and the rate as a decimal in B2. Use =ROUND(A2*B2,2) for the tax and =A2+ROUND(A2*B2,2) for the total.
How to calculate sales tax backwards from a total
When a price already includes tax, divide the total by 1 plus the rate. The Washington State Department of Revenue gives this example: shoes advertised at $100.00 tax included, in a city with an 8.9% rate (Washington DOR):
- Add 1 to the decimal rate: 1 + 0.089 = 1.089.
- Divide the total by that number: $100.00 ÷ 1.089 = $91.83 (the price before tax).
- Subtract to find the tax: $100.00 − $91.83 = $8.17.
The Minnesota Department of Revenue uses the same method for businesses whose receipts include tax: at the 6.875% state rate, divide receipts by 1.06875 (Minnesota Department of Revenue). Do not simply take 8.9% off the total. That removes too much, because the rate was applied to the smaller pre-tax price, not to the total.
How to find your combined sales tax rate
Most purchases are taxed at a combined rate: the state rate plus any county, city or special district rates. The Tax Foundation reports that 45 states levy a statewide sales tax and 38 states allow local sales taxes, and that the population-weighted average combined rate is 7.53% as of July 1, 2026 (Tax Foundation).
- Check a receipt. Divide the tax line by the taxable subtotal to see the rate you were charged.
- Use your state’s lookup tool. Many state revenue departments offer an address-based rate lookup, which is more precise than a ZIP code.
Sales tax rates by state in 2026
These figures come from the Tax Foundation’s midyear 2026 report. The combined rate adds the population-weighted average local rate, so your exact rate can be higher or lower (Tax Foundation).
| State | State rate | Average combined state and local rate |
|---|---|---|
| California | 7.25% | 9.03% |
| Texas | 6.25% | 8.20% |
| New York | 4.00% | 8.54% |
| Florida | 6.00% | 6.98% |
| Illinois | 6.25% | 8.98% |
| Pennsylvania | 6.00% | 6.34% |
| Ohio | 5.75% | 7.29% |
| Georgia | 4.00% | 7.56% |
| North Carolina | 4.75% | 7.10% |
| Washington | 6.50% | 9.57% |
| Tennessee | 7.00% | 9.61% |
| Louisiana | 5.00% | 10.13% |
California has the highest statewide rate at 7.25%, and Louisiana has the highest average combined rate at 10.13%. Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax; only Alaska lets localities add their own (Tax Foundation).
Common sales tax mistakes
Subtracting the percentage from a tax-included total
Taking 8.9% off a $100 total gives $91.10, not the correct $91.83. Always divide by 1 plus the rate.
Using only the state rate
In states with local taxes, the state rate alone understates the tax. Texas, for example, has a 6.25% state rate but an average combined rate of 8.20% (Tax Foundation).
Forgetting what is exempt
States differ on whether groceries, clothing and services are taxable. The Tax Foundation notes that most states exempt groceries, while some tax them at a reduced or full rate (Tax Foundation).
Tips are a separate calculation from sales tax; our U.S. tipping guide covers that math. For other money basics, see how to write a check and the compound interest formula with examples.
Frequently asked questions
How do you calculate sales tax?
Convert the combined sales tax rate to a decimal and multiply it by the taxable price. For example, a $50 item at 8.25% has $4.13 in sales tax, for a total of $54.13.
What is the formula for sales tax?
Sales tax = price × tax rate (as a decimal), and total price = price × (1 + tax rate). At a 6% rate, a $20 item has $1.20 in tax and costs $21.20 in total.
How do I calculate sales tax backwards from total?
Divide the total by 1 plus the tax rate to get the pre-tax price, then subtract that from the total to get the tax. A $100.00 total at 8.9% is $91.83 before tax plus $8.17 in tax.
How do I calculate 7% sales tax?
Multiply the price by 0.07 to get the tax, or by 1.07 to get the total. On a $100 purchase, 7% sales tax is $7.00 and the total is $107.00.
Which states have no sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, according to the Tax Foundation. Alaska still allows local sales taxes.
Is sales tax deductible?
On a federal return, you can choose to deduct state and local general sales taxes instead of state and local income taxes if you itemize on Schedule A, subject to the SALT deduction limit, according to the IRS.
Sources
- Tax Foundation: State and Local Sales Tax Rates, Midyear 2026
- Washington State Department of Revenue: Advertising, tax included in price
- Minnesota Department of Revenue: Subtracting Sales Tax from Receipts
- IRS: Topic no. 503, Deductible taxes
- OpenStax Contemporary Mathematics: 6.2 Discounts, Markups, and Sales Tax
Featured image: “Plus tax” price sign. Photo by Daniel Oines, CC0, via Wikimedia Commons.
