Reverse Sales Tax: How to Find the Price Before Tax
To reverse sales tax, divide the total by one plus the tax rate as a decimal. A $107 total at 7% is 107 ÷ 1.07 = $100 pre-tax, so $7 was tax. Subtracting 7% of the total instead removes too much, because the tax was charged on the smaller pre-tax price.
Why You Divide, Not Subtract
Sales tax is added by multiplying the pre-tax price by one plus the rate. A $100 item at 7% becomes 100 × 1.07 = $107. To undo that, you reverse the multiplication with division: 107 ÷ 1.07 = $100.
The intuitive move — taking 7% of the total and subtracting it — is wrong because the tax was never 7% of the total. It was 7% of the smaller pre-tax figure. Seven percent of $107 is $7.49, so subtracting it leaves $99.51, understating the real pre-tax price of $100.
Getting Your Rate Right
The United States has no single sales-tax rate. Each state sets its own, and most let counties and cities add more on top, so the combined rate depends on exactly where the sale happened. Rates range from zero in a handful of states to over 10% in some cities.
Because of that, any reverse-tax tool has to let you enter your own rate. Look up your combined state and local rate from your state's Department of Revenue, and check that the tax figure the calculation produces matches the tax line on your receipt.