Calculator to deduct VAT or to remove, extract or take off a percent % of a tax from a price which includes tax
or how to get a nett or net price from a gross price.
Take a tax off after it is added on
Find the price before tax was added on  
Deduct tax method
 

How to deduct tax from a price which includes tax.

The world is taxed. We have to pay tax on most of the things that we buy. People can often add tax to a figure, but when it comes to taking it off they go a bit quiet, interrogating teachers, kids and old folks until they find an answer. So here it is...

Taking-off Tax from a price

This is the calculation you need to use when:
you know a price after tax (the Gross price)

but want to find out the price before tax (the Net price).

If we assume that sales tax is at a rate of 20%...

Gross price

divided by

1.20

= Net price

Price after tax

divided by

1.20

= Price before tax

eg. 180.00

divided by

1.20

= 150.00

In the equation above, 1.20 is the divisor. To get the divisor, we need to convert the tax rate into a fraction by dividing it by 100 and then add the resulting fraction to 1.

So, if we assume that tax is at a rate of 20%,
we will need to divide 20 by 100, giving 0.20, then add 1.
Thus the divisor is 0.20 +1 = 1.20

So now let's assume that a tax is at a new rate of 2.5%...

First, get the divisor :
2.5 / 100 = 0.025
0.025 + 1 = 1.025

The divisor is 1.025

So...

Gross price

divided by

1.025

= Net price

Price after tax

divided by

1.025

= Price before tax

eg :

     

102.50

divided by

1.025

= 100

102.50 inc Tax

= 100 + Tax


Click here to see how to add tax to a price.

For more information on taxes and Value Added Tax ( vat )

How much do you markup a price to allow for a % discount?

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last modified : 24 th. January 2012


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