What is the reverse sales tax formula in one line?

Pre-tax amount = tax-inclusive total / (1 + sales tax rate), where the rate is expressed as a decimal.

How do I recover the sales tax dollar amount?

Subtract the pre-tax amount from the tax-inclusive total. For example, $86.75 minus about $80.89 leaves about $5.86 in tax when the combined rate is 7.25%.

Does the formula change if local tax applies?

The math is the same. Only the combined rate changes when local sales taxes are added to the state rate.

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What Is the Reverse Sales Tax Formula?

Define the reverse sales tax formula for US tax-included totals, contrast dividing by 1 plus the rate with subtracting a percent from the gross, and tie the math to receipts, invoices, and combined state and local rates.

The precise relationship

Let T be the tax-inclusive total and r the combined sales tax rate as a decimal. The pre-tax price P satisfies T = P(1 + r), so P = T / (1 + r). Sales tax owed equals T - P. This is the definition used across CalcLook reverse sales tax tools.

Why subtraction misleads people

Many teams try to take 8% of the total and subtract it. That treats the tax as if it were calculated on the gross amount, but sales tax is calculated on the amount before tax. The error grows as the rate increases, which is why the divide-by formula matters.

Worked example

A receipt shows $86.75 with a combined 7.25% sales tax rate. Divide 86.75 by 1.0725 to get about $80.89 pre-tax. Subtract to get about $5.86 in sales tax. Multiply back: 80.89 × 1.0725 ≈ 86.75, which confirms the calculation within normal rounding.

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FAQ

What is the reverse sales tax formula in one line?: Pre-tax amount = tax-inclusive total / (1 + sales tax rate), where the rate is expressed as a decimal.
How do I recover the sales tax dollar amount?: Subtract the pre-tax amount from the tax-inclusive total. For example, $86.75 minus about $80.89 leaves about $5.86 in tax when the combined rate is 7.25%.
Does the formula change if local tax applies?: The math is the same. Only the combined rate changes when local sales taxes are added to the state rate.