Adding sales tax, and taking it back off
Adding tax is the easy direction. Multiply the price by the combined rate and add it on:
A $100 item at a combined 8.6% comes to $108.60, of which $8.60 is tax.
Going the other way is where people go wrong. If you are handed a total of $108.60 and you want the pre-tax figure, you divide rather than subtract:
Subtracting 8.6% from $108.60 gives $99.26, which is wrong by 74 cents, because the 8.6% was charged on $100 and not on $108.60. On a $5,000 invoice that same mistake costs about $37 — enough to matter when you are reclaiming input tax or reconciling a till.
Why the rate on your receipt is rarely a round number
In the United States the rate you actually pay is a stack. A state sets a base rate, then a county adds its own, then a city, then sometimes a special district for transit, stadiums or hospitals. A shopper in one part of a county can pay a different rate from a shopper ten minutes away. Combined rates over 10% are common in parts of Louisiana, Tennessee, Arkansas, Alabama and Washington.
Five states have no statewide sales tax at all — Alaska, Delaware, Montana, New Hampshire and Oregon — though Alaska allows boroughs and cities to charge their own local tax, so a zero state rate does not always mean a zero receipt.
Origin-based and destination-based
Most states are destination-based: the rate is set by where the buyer takes delivery, which is why online orders to different addresses are taxed differently. A minority are origin-based for in-state sales, using the seller's location instead. If you sell across state lines, economic nexus thresholds decide whether you have to register and collect in the buyer's state at all.
VAT and GST work the same arithmetic
The same two formulas handle European VAT, UK VAT, Australian and Canadian GST, and Indian GST. The practical difference is presentation: in most VAT countries the shelf price already includes the tax, so the strip-tax direction is the one you use daily. UK VAT at 20% means dividing by 1.2 to find the net; Australian GST at 10% means dividing by 1.1.
If you are pricing a product rather than checking a receipt, the profit margin calculator works from the pre-tax figure — margins are always calculated on the net price, never on the tax-inclusive one. For a shop discount applied before tax, try the discount calculator.