Discount & sales tax calculator
The sale price, the tax added, or the net price hidden inside a gross one.
You pay
$96.00
20% off $120.00
- You save
- $24.00
- Original
- $120.00
- Of original
- 80%
Three jobs, one page
The same arithmetic runs in three directions, and mixing them up is how people lose money:
- Discount — a price is reduced by a percentage.
- Add tax — a net price gets tax added.
- Remove tax — a gross price already contains tax, and you need the net.
The third one is where most calculators quietly fail.
Discounts
sale price = price × (1 − rate ÷ 100)
saved = price × rate ÷ 10020% off 120 is 120 × 0.80 = 96, a saving of 24.
Stacked discounts multiply. “20% off, then another 10%” is 0.80 × 0.90 = 0.72, so the customer pays 72% and the total discount is 28%, not 30%. Retailers know this; it is why “extra 10% at checkout” is worth less than it sounds.
Adding tax
gross = net × (1 + rate ÷ 100)A net price of 100 at 20% becomes 120, with 20 of tax. Nothing surprising here.
Removing tax — the trap
If a gross price of 120 includes 20% tax, the net price is not 120 − 20% = 96.
The 20% was calculated on the net price, not the gross one. So the gross is 120% of the net:
net = gross ÷ (1 + rate ÷ 100) = 120 ÷ 1.20 = 100
tax = gross − net = 20Subtracting the rate from the gross overstates the tax and understates the net every single time. The higher the rate, the bigger the error: at 20% it is 4% of the price, which is exactly the margin on a lot of retail.
A worked example
A jacket listed at 120, tax-inclusive at 20%:
- Net price: 100.00
- Tax included: 20.00
- Effective tax as a share of the gross: 16.67%
That last number is the one people forget. A 20% VAT rate is one sixth of a tax-inclusive price, not one fifth.
Rounding and line items
Tax is usually calculated per line item and then summed, not calculated on the order total. The two can differ by a cent or two, and in accounting the line-level figure is normally the one that must reconcile. If you are checking an invoice, calculate per line.
When the rate is not the whole story
This page applies the rate you type. It does not know that books are reduced-rated in one country, that clothing is exempt below a threshold in another, or that a city adds its own percentage on top of a state rate. Those rules change, and a calculator that guesses them is worse than one that asks.
Frequently asked questions
How do I remove sales tax from a total?
Divide by 1 plus the rate, do not subtract the rate. At 20%, a gross price of 120 has a net price of 120 ÷ 1.20 = 100, and the tax is 20. Subtracting 20% of 120 would give 96, which is wrong by four.
Do two discounts of 20% and 10% equal 30% off?
No. They compound. 0.80 × 0.90 = 0.72, so the total discount is 28%, not 30%. The second discount applies to the already-reduced price, so it removes a smaller amount of money than the first.
Why do some prices include tax and others do not?
Convention. In the EU and the UK, consumer prices must be advertised tax-inclusive, so the shelf price is what you pay. In the US and Canada, sales tax is added at the register and varies by state or province, so advertised prices are usually net.
Is VAT the same as sales tax?
Not quite. VAT is collected at each stage of the supply chain with businesses reclaiming the tax they paid, while US sales tax is collected once at the final sale. The arithmetic for a single consumer purchase is the same, which is why one calculator handles both.
Which rate should I use?
The rate that applies to that specific product in that specific place. US state and city rates stack, some categories are exempt, and VAT rates differ for reduced-rate goods such as food and books. This calculator applies whatever rate you enter and does not guess.
Everything is calculated in your browser. Nothing you type is sent anywhere.