VAT, GST and Sales Tax Explained: How to Add or Remove Tax From a Price

By the SAA Tool editor, an IT support engineer · Last reviewed 1 October 2026 · 7 min read

VAT, GST and sales tax all add a percentage to what you pay, and the maths behind them is the same. Adding tax is easy. Taking it back out of a price that already includes it is where most people slip, usually by knocking the rate straight off the total. Below are the differences, the two formulas you need, and examples in several currencies that you can check.

VAT, GST and sales tax: what's the difference?

VAT (value added tax) and GST (goods and services tax) are two names for the same kind of tax. Each business in the supply chain charges it on its sales and reclaims the tax it paid on its own purchases, so in the end the tax falls on the final customer. The UK and EU countries call it VAT. Australia, New Zealand, Singapore and Canada call it GST, and in some Canadian provinces the federal and provincial parts are combined as HST.

Sales tax, as used in the United States, is normally charged once, on the final sale to the customer. There is no national rate: states set a base rate and local areas can add their own. In California, for example, the statewide rate is 7.25%, and district taxes of 0.10% to 1.50% push it higher in most areas, according to the California Department of Tax and Fee Administration.

For a shopper, the practical difference is usually whether the shelf price already includes the tax. In many VAT and GST countries it does, while US sales tax is usually added at the till. Receipts normally show the tax separately either way.

Standard rates in a few countries

These standard rates come from each country's official tax pages as they stood when this guide was reviewed. Many countries also have reduced or zero rates. In the UK, for example, home energy and children's car seats are taxed at 5%, and most food and children's clothes at 0%, so one shopping basket can mix several rates.

Within the EU, the standard rate can't be lower than 15% and reduced rates can't go below 5%, as the EU's Your Europe VAT page explains. Rates do change: Nova Scotia's HST fell from 15% to 14% on 1 April 2025, for instance. Before you invoice or file, check the current rate with the tax authority, such as GOV.UK in the UK, the Australian Taxation Office, Inland Revenue in New Zealand, IRAS in Singapore or the Canada Revenue Agency.

How to add tax to a price

Turn the rate into a decimal, add 1, and multiply:

Price with tax = Price without tax × (1 + rate)

• A £250 invoice before VAT at 20%: 250 × 1.20 = £300, of which £50 is VAT.
• An A$80 service plus 10% GST: 80 × 1.10 = A$88.
• A C$45 purchase in Ontario at 13% HST: 45 × 1.13 = C$50.85.

How to remove tax from a price that includes it

Here you divide rather than subtract:

Price without tax = Price with tax ÷ (1 + rate)

Tax included = Price with tax − Price without tax

Take a €119 item in Germany at 19% VAT: 119 ÷ 1.19 = €100, so the VAT is €19. The tempting shortcut of taking 19% off the total gives 119 × 0.81 = €96.39, which is €3.61 too low. The 19% was worked out on the net price of €100, not on €119, so it makes up a smaller share of the total.

Some more to check:

• S$54.50 in Singapore at 9% GST: 54.50 ÷ 1.09 = S$50.00 before GST, and S$4.50 of GST.
• NZ$46 at 15% GST: 46 ÷ 1.15 = NZ$40.00 before GST, and NZ$6.00 of GST.

Handy fractions

The tax inside a tax-inclusive price is always rate ÷ (1 + rate) of the total. For common rates that gives tidy fractions:

So in Australia, dividing a GST-inclusive price by 11 gives the GST: A$88 ÷ 11 = A$8.

Discounts, coupons and tax together

A percentage discount and a percentage tax are both multiplications, so the order doesn't change the answer. An $80 item with 25% off at a 7.25% sales tax rate costs 80 × 0.75 × 1.0725 = $64.35, whichever you apply first.

A fixed amount off is different. Take $10 off a $60 price before tax and you pay (60 − 10) × 1.0725 = $53.63. Take it off after tax and you pay 60 × 1.0725 − 10 = $54.35. How a coupon is treated for tax depends on local rules, so the receipt is the best guide.

Two discounts don't simply add up either. 20% off and then an extra 10% off is 1 − 0.80 × 0.90 = 0.28, so 28% off in total, not 30%.

Tax on business prices

If your business is registered for VAT or GST, the tax you charge customers isn't income. You pass it on to the tax authority and can usually reclaim the tax on your own business purchases. That's why profit and margin should be worked out on prices without tax. Selling something for £60 including 20% VAT that cost you £30 before VAT gives a net price of £50 and a margin of 40%. Using the £60 figure would suggest 50% and flatter the business. The margin vs markup guide goes into this in more detail.

When you quote a price, say which kind it is. "Excl. VAT" or "plus GST" means before tax, and "incl. VAT" means the tax is already in.

How to do it with our tools

The VAT Calculator handles VAT, GST and sales tax at any rate, and it runs in your browser.

1. Under What do you want to do?, choose Add VAT to my price or Remove VAT from my price.
2. Type the Amount, then your rate in VAT rate (%), for example 19 for Germany or 10 for Australian GST.
3. Pick a Currency. It only changes how the figures are shown; nothing is converted.
4. Read the price without VAT, the VAT and the price with VAT. They update as you type.

For a sale price with tax, open the Discount Calculator. Enter the Original price and the Discount (%), choose Percent off or Amount off as the Discount type, and add your rate under Sales tax / VAT % (optional). It shows You pay, You save and the Total discount, and the Extra discount % (optional) box shows what two stacked discounts really come to. It applies the tax after the discount, so for a fixed amount off it gives the before-tax version from the coupon example above.

The Percentage Calculator covers odd sums such as what share of a receipt went on tax, and the Profit Margin Calculator works out margin and markup once the tax is out.

Two limits to know. Each tool uses one rate at a time, so for a basket with mixed rates, work out each rate separately and add them up. And they don't round line by line the way some tills and invoicing systems do, so a result can differ from a receipt by a cent or two.

Common mistakes

• Subtracting the rate from a tax-inclusive price. Divide by 1 plus the rate instead: 120 ÷ 1.20 = 100, not 120 × 0.80 = 96.
• Using an old rate. Rates change, so check the official page before you invoice or file a return.
• Assuming everything is taxed at the standard rate. Food, children's goods and home energy often have reduced or zero rates.
• Mixing up net and gross prices. Write "excl." or "incl." next to every price you quote.
• Adding tax twice. If a price already includes tax, don't put it through "add" mode again.
• Forgetting local sales tax. In the US, the rate can change from one city or county to the next.

This guide is general information, not tax or financial advice. Tax rules and rates change and differ by country, so check with your tax authority or an accountant for your own situation.

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