How to Calculate Net Sale Price Before Retail Tax

A few quick calculations are all that's needed to calculate pre-tax prices.

Retail taxes, also known as sales taxes, are typically imposed by state and local governments to raise revenue for government functions. Many times the cost of the sales tax is added to the price. However, some stores will list the price of items with the sales tax already included. In order to calculate the net sale price before the retail tax is added, you need to know the price including tax and the sales tax rate.

Things You'll Need

• Calculator

Instructions

1. Look up the sales tax rate for your area by contacting your state department of revenue and local department of revenue.

2. Divide the total sales tax rate by 100 to convert it from a percentage to a decimal. For example, if the total sales tax equals 5.6 percent, you would divide 5.6 by 100 to get 0.056.

3. Add 1 to the percentage. Continuing the example, you would add 1 to 0.056 to get 1.056.

4. Divide the total price by the result from above to calculate the net sale price before retail tax. Finishing the example, if your total cost was $126.72, you would divide 126.72 by 1.056 to find that the net sale price before retail tax would be $120.

References

• SI Metric: How to Take Tax Off a Price
• CSG Network: Sales Tax Calculator and Decalculator