Calculate the original price of an item given the sales tax% and the final price. Evaluate the total sales tax given the starting price and final price.
Reverse Sales Tax Formula
The following formula can be used to calculate the original price of an item given the sales tax % and the final price of the item.
- Where FP is the final price
- ST is the sales tax (%)
This can be useful for making sure you are being charged the correct amount out at stores, and for understanding the total percent of the final price that is coming from the sales tax.
Reverse Sales Tax Definition
Reverse sales tax is a way to calculate the initial price of an item given the selling price and sales tax.
How to calculate a reverse sales tax
The following example is a step-by-step guide on how to calculate the initial price of an item given its final price and sales tax.
- First, you must determine the sales tax % in your state. You can either use Google or look at your receipt to figure this out. The only exception to this is Delaware, which has no sales tax.
- Let’ assume the sales tax for this problem is 13%. Quite higher than normal, but it’s just an example.
- Now we need to determine the final price of the item. This should be the final number on your receipt if it’s the only item you purchase. If you purchase multiple items, you will need to subtract the others.
- Let’s assume the total item was $100.00 to make this problem simple.
- Finally, plug the numbers into the calculator or formula above, and you have your initial price. The answer is $88.49.
Use this calculate while shopping to understand the true price of the items you are going to buy or have already bought.
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