How to Back Out Taxes From a Total

Some retailers host "tax-included" sales as special promotions. In addition, many car dealers provide the "out-the-door" price (including tax, title and license) to price quotes. These methods can be confusing; they often leave you unsure of the exact price you are paying for the product. As long as you know your tax rate, you can easily back out the taxes from a total amount.

Things You'll Need

• Calculator (optional)

Instructions

1. Determine the total tax percentage on the purchase. If the total amount is for a standard retail purchase, combine your local and state sales tax to determine the total tax percentage.

2. Add the total tax percentage to 100 percent. For example, if your total tax percentage is 6.75 percent, you should end up with 106.75 percent.

3. Convert the percentage to a decimal. Move the decimal two spots to the left to convert the percentage to a decimal (106.75 to 1.0675). If the percentage is whole, place a decimal at the end and move it two spots to the left.

4. Divide the total price by the percentage. Continuing with our example, if your total price is $119, divide $119 by 1.0675. The resulting amount ($119/1.0675=$111.48) equals the pre-tax price.

Tips & Warnings

• If you end up with a long or odd number, simply round up or down to the nearest cent.

• Double-check your figure for accuracy. Multiply the pre-tax amount by the sales tax percentage (convert 6.75 to .0675) to determine the tax amount, and then add the two figures together. The amount should equal the original after-tax total.

References

• Missouri Department of Revenue
• MSNBC