A small but significant amount of monetary compensation paid to the government as a response for the items and goods purchased is called a sales tax. This amount of money is usually collected by the sellers responsible for collecting funds as part of the customers’ tax when an item is purchased. This rule is imposed by the governments in most countries, especially on services, facilities, and goods. These are known as conventional or retail sales tax and are only applicable to the end-user who obtains the good. The logic behind understanding sales tax relevance is the extensive documentation and investments in different manufacturing stages. Therefore different entities and companies ask for a slender amount of deduction in monetary compensation, often equitable to sales tax.

It has now become easier to understand and determine the cost margin for consumers and the buyer. Keeping an insight and know-how regarding the sales track may facilitate retailers and buyers to check on the standard sales tax or value-added tax. It is imperative because sales tax is reasonably one of the most vital and fundamental aspects of financial institutions linked to the net business and retail exchange. In other words, sales tax is gradually but noticeably making a considerable impact on various items of purchase, compelling the buyers to understand and analyze it at the time of purchase. With a mathematical formula, you can figure out the exact amount of monetary percentage paid to the government. The same tax amount can be calculated with a straightforward multiplication of the net price, which is the original price, before applying sales tax with the sales tax percentage. The resulting amount is the total price which is the amalgamation of the net price and the sales tax amount.

This is a simple and uncomplicated way to determine the total cost, including the sales tax. By following a basic equation, you can keep track of the increasing tax rates, which are gradually becoming more significant. However, if you want to determine the amount of a purchased item preceding the tax application or calculate the sales tax unconventionally, the desired amount can be obtained with the same mathematical equation as the concept remains unchanged. You will need to know the total amount paid or the amount of tax applied for that purpose. By knowing these two determinants, you can effortlessly estimate the tax rate. If you are given the tax rate, you can easily evaluate the amount of tax paid.

If you know the total amount consumed and the total percentage of the paid tax amount, you can conclude the percentage tax rate.

**How to calculate tax percentage?**

**To calculate tax percentage, you need to subtract the tax paid from the total, divide the tax paid by the pre-tax price, and finally convert the tax rate to a percentage. Please follow these steps:**

**Deduct tax paid from the total amount**

You can withdraw the amount of tax you have paid from the total amount, which will be the good’s post-tax price. This will take you to the item’s price before the tax allocation; therefore, you will get the item’s pre-tax price. For example, if you have paid $26.75 for two items and $1.75 was the amount of tax applied as mentioned in the receipt, then the items’ cost before the tax was $25. This amount has been derived after dividing the total cost for two items and the tax amount.

**Divide the paid tax amount by the pre-tax number**

You can also determine the sales tax by dividing the total amount of tax you have paid as a buyer by the item’s price before the tax. The resulting amount will be the percentage tax rate which will be highlighted in a decimal form. For example dollar, 1.75÷25 dollars is equal to .07. Therefore you have paid .07% of the tax amount.

**Conversion of the tax rate to percentage form**

There is another uncomplicated way to determine the sales tax. Multiply the mentioned tax rate by a hundred as it is a mathematical logic to convert numbers into percentage form. So if the result of the tax rate is .07 in decimal, you can convert it easily into the percentage form. .07× hundred is equal to 7%. Therefore 7% is the total amount of tax rate you have paid on purchasing the two items.

## How to do the reverse tax calculation?

**How to calculate sales tax percentage from the total?**

**To calculate the sales tax backward from the total, divide the total amount you received for the items subject to sales tax by “1 + the sales tax rate”. For example, if the sales tax rate is 5%, divide the sales taxable receipts by 1.05.**

You can calculate the amount of tax paid if you know the total post-tax price for the purchased item and the tax rate measured. This method can calculate the tax paid by determining it backward to analyze monetary compensation paid as sales tax.

**Adding 100 percent to the tax rate**

In this case, you can calculate the total amount of tax paid by adding 100% to the total sales tax rate. This hundred percent is synonymous with the pre-tax amount of the product purchased. When added to the tax rate, this whole amount will get you the total percentage that symbolizes or highlights the item’s pre-tax amount and the tax. For example, if an item has a sales tax of around 5%, you will get 105%.

**Conversion to decimal form**

To convert an amount to the decimal form, you can divide the tax-paid rate by hundred. For example, if the total amount was 105%, you can divide by a hundred, giving you 1.05.

**Division of post-tax price with decimal**

The purchased item’s post-tax price can be divided by the tax paid in a decimal form calculated by converting a percentage into a decimal form. That resulted amount will be the amount before any amount of tax is applied. This is the pre-tax cost of the item, so if you have purchased an item that costs $95 after the allocated taxes, you can divide it with 1.05 and get $90.48.

**Subtraction of pre-tax price from the total or post-tax price**

If you are aware of the total cost of an item post and before the taxes, you can take out the pre-tax price and subtract it from the post-tax price to determine the exact amount of tax you have paid during retail. Therefore $95 -$90.48 is $4.52. $4.52 is the exact amount of tax you have paid on a purchase.

Reverse sales tax is something you can easily calculate. If someone is interested in understanding the actual income and the amount of sales tax, you can also calculate it backward and extract it from the total amount. There are online reverse sales tax calculators available to make the process easier with the reverse sales tax formula. The formula is simple and straightforward, dividing the sales receipt by one plus the sales tax percentage. You can multiply that resulted amount by the tax rate and get yourself a total sales tax dollar amount.