Calculator to deduct VAT or to remove, extract or take off a percent % of a tax from a price which includes tax
or how to get a nett or net price from a gross price.
 Find the price before tax was added on Deduct tax method

#### How to deduct tax from a price which includes tax.

The world is taxed. We have to pay tax on most of the things that we buy. People can often add tax to a figure, but when it comes to taking it off they go a bit quiet, interrogating teachers, kids and old folks until they find an answer. So here it is...

#### Taking-off Tax from a price

This is the calculation you need to use when:
you know a price after tax (the Gross price)

but want to find out the price before tax (the Net price).

 If we assume that sales tax is at a rate of 20%... Gross price divided by 1.20 = Net price Price after tax divided by 1.20 = Price before tax eg. 180.00 divided by 1.20 = 150.00

In the equation above, 1.20 is the divisor. To get the divisor, we need to convert the tax rate into a fraction by dividing it by 100 and then add the resulting fraction to 1.

So, if we assume that tax is at a rate of 20%,
we will need to divide 20 by 100, giving 0.20, then add 1.
Thus the divisor is 0.20 +1 = 1.20

 So now let's assume that a tax is at a new rate of 2.5%... First, get the divisor : 2.5 / 100 = 0.025 0.025 + 1 = 1.025 The divisor is 1.025 So... Gross price divided by 1.025 = Net price Price after tax divided by 1.025 = Price before tax eg : 102.50 divided by 1.025 = 100 102.50 inc Tax = 100 + Tax

#### Click here to see how to add tax to a price.

For more information on taxes and Value Added Tax ( vat )

How much do you markup a price to allow for a % discount?

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last modified : 24 th. January 2012

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