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How do you extract a tax already included in a price?

Quick lesson1 min read

When a price includes a simple percentage tax on the base, divide the total by one plus the rate. Subtracting the percentage straight from the total uses a different base.

An example with numbers

With a hypothetical 20% rate, a final price of $120 splits into a $100 base and $20 of tax. Subtracting 20% from $120 would give $96, which does not reproduce the price when you apply the rate again.

Try it with your numbers

Check the operation by multiplying your base by 1.20. For a real invoice, first identify the rate and treatment that apply to the transaction and jurisdiction.

This calculator is on its way. In the meantime, you can do the calculation on paper or in a spreadsheet.

Example figures for learning purposes. They are not a recommendation and do not replace professional advice.

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