VAT & Sales Tax Calculator

What is VAT and sales tax?

Value Added Tax (VAT) and sales tax are consumption taxes added to the price of goods and services. VAT is used across the European Union, the United Kingdom and many other countries, while the United States and Canada use sales tax or GST/HST systems. Although the mechanics differ behind the scenes, from a buyer's point of view they work the same way: a percentage is added on top of the base price, and that extra amount is collected by the seller and passed on to the government. This calculator handles any of them — you just enter the rate that applies.

Adding tax vs removing tax

There are two situations where you need to do tax math, and this tool covers both. The first is adding tax: you have a net price (the price before tax) and want to know the final price a customer pays. This is straightforward — multiply the net price by the tax rate and add it on. If something costs 100 before a 20% tax, the customer pays 120, of which 20 is tax.

The second, and more error-prone, situation is removing tax: you have a gross price that already includes tax, and you want to work backward to the net price and the tax portion. The common mistake here is to simply subtract the rate — but that gives the wrong answer. To remove 20% tax from a gross price you divide by 1.20, not multiply by 0.80. Working from our example, 120 divided by 1.20 gives 100 net, and the tax is 20. This calculator does that division correctly so you never have to second-guess it, which is especially handy for freelancers and small businesses extracting the tax portion from receipts for their bookkeeping.

The formulas

• Adding tax: gross = net × (1 + rate); tax = net × rate
• Removing tax: net = gross ÷ (1 + rate); tax = gross − net

Who needs this?

Shoppers use it to understand the true cost of a purchase before reaching the checkout. Freelancers and small businesses use it constantly: to set prices that include tax, to issue correct invoices, and to separate the tax portion from total takings when filing returns. Online sellers use it to display tax-inclusive prices in regions that require them. Because the rate is fully editable, the same tool works whether you are dealing with a 5% sales tax, a 19% or 20% standard VAT, a reduced 7% rate, or anything in between.

Tips

• Check whether your country requires displayed prices to include tax — rules differ for consumers and businesses.
• Keep tax separate in your bookkeeping; the money collected as tax is not your revenue.
• Many countries have reduced rates for food, books or essentials — confirm the correct rate for each product.