Using the calculator's own default rate of 8.5%: starting from a $50 pre-tax price and adding tax gives $4.25 in tax, for a $54.25 total. That part is straightforward multiplication. But run it the other way — starting from a $50 total that already includes tax — and the pre-tax price isn't $50 minus $4.25. It's $46.08, with $3.92 of the $50 being tax.
| Pre-tax price | Tax | Total | |
|---|---|---|---|
| Add Tax mode | $50.00 | $4.25 | $54.25 |
| Extract Tax mode | $46.08 | $3.92 | $50.00 |
The natural instinct when working backward from a $50 receipt total is to just multiply $50 by 8.5% and assume that's the tax — which gives $4.25, not the correct $3.92. That's because 8.5% tax is defined relative to the pre-tax price, and a total that already includes tax is a larger number than the pre-tax price was. Dividing the total by (1 + tax rate) rather than multiplying it by the tax rate is what the "Extract Tax" mode does automatically, which is exactly why it exists as a separate mode instead of just subtracting a percentage.
Sales tax varies by country, state, and sometimes city — check your local tax authority's website for the exact rate that applies to you.
"Add Tax" starts from a pre-tax price and adds tax on top. "Extract Tax" does the reverse — useful when you have a receipt total and want to know how much of it was tax.
Enter your combined effective rate — if your area has both a state and local tax, add them together first.