How do You Back Out Sales Tax?


In order to 'back out' sales tax, you'll need to know the tax rate of your state and city. For example, total tax in my city is 7.5%. If I purchase an item and the receipt reads $537.50, then I divide this amount by 1.075 and find the item cost exactly $500 before tax was added.
Formula: Total cost / (1.00 + percentage as a decimal) = Pre-tax price
1 Additional Answer
Here is an example of how to back out sales tax. If the price paid, including tax, is $10.53, and the tax rate is 8%, divide $10.53 by 1.08. This tells you the price before tax is $9.75.
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