Reverse Sales Tax Calculator

Reverse Sales Tax Calculator is used to calculate the original price of an item given the tax rate and the tax added price.

What Is a Reverse Sales Tax Calculator?

A reverse sales tax calculator helps you calculate the pre-tax price of a product or service. A regular sales tax calculator takes in the cost of an item and adds the tax to get the final price, whereas a reverse sales tax calculator takes in the final price and the tax rate to calculate the cost of the item before tax is added. A reverse sales tax calculator is useful for consumers and business owners who want to get the sales price based on the tax rate and final price. It helps business owners to calculate their profit margin and set the cost of an item based on the final price.

How to Calculate Reverse Sales Tax?

To understand how a reverse sales tax calculator works, first learn how the standard sales tax works. The sales tax formula is given below. Total Price = Base Price + Sales Tax Where:

• Total Price is the final price you paid with tax added.
• Sales Tax is the tax amount calculated based on the sales tax rate in your city.
• Base Price is the original price of the product before tax was applied.

The reverse sales tax calculator flips the above formula. You first input the Total Price and the Sales Tax Rate, to calculate the Base Price. The formula for the reverse sales tax calculation is given below:

• Base Price = Total Price ÷ (1 + Sales Tax Rate)

Let’s say you bought a product for $120 and the sales tax rate in your area is 10% (0.10). To find the base price (the original price before tax), use the formula:

• Base Price = Total Price ÷ (1 + Sales Tax Rate)
• Base Price = $120 ÷ (1 + 0.10)
• Base Price = $120 ÷ 1.10
• Base Price = $109.09

Therefore, the original price of the product is $109.09, and the sales tax of $10.91 was added to reach the total price of $120.