To take tax out of a price that already includes it, divide by 1 plus the rate: at 8%, divide by 1.08. A price of $54.00 corresponds to a base of $50.00, because 54.00 ÷ 1.08 = 50. Subtracting 8% does not work, because that percentage was figured on the base and not on the final price. If you know the part and the percentage and want the total, the percentage calculator solves that inverse relationship. The rates and prices in the examples are made up.
Worked example: $54.00 with 8% tax included
A receipt shows $54.00 with 8% tax included. What is the price before tax, and how much tax does it contain?
- Write the factor. The price is the base times 1 + 8/100 = 27/25.
- Divide by the factor. Dividing by 27/25 is the same as multiplying by 25/27.
- Find the base. 54 × 25/27 = 2 × 25 = 50.
- Find the tax. 54.00 − 50.00 = 4.00.
Result: a base of $50.00 and tax of $4.00.
Check: 50 × 1.08 = 54.00.
Why subtracting the percentage does not work
The tax was figured on the base. If the base is 100 and the rate is 8%, the tax is 8 and the final price is 108. Those 8 are 8% of 100, but only 7.41% of 108 (the fraction 8/108, rounded). Subtracting 8% from 108 takes off 8.64 and leaves 99.36, which is below the base.
How much tax the price contains
The price splits into 100 + r equal parts: 100 are base and r are tax. So the tax is r/(100 + r) of the price, not r/100. At 10% it is 1/11, at 25% it is 1/5 and at 50% it is 1/3. In a $33 price with 10% included, the tax is 33 × 1/11 = $3 and the base is $30.
| Rate r | Divide by | Same as multiplying by | Price → base |
|---|---|---|---|
| 10% | 1.10 | 10/11 | $33 → $30 |
| 25% | 1.25 | 4/5 | $62.50 → $50 |
| 50% | 1.50 | 2/3 | $75 → $50 |
The middle column is the fraction that turns any price into its base, whatever the amount. If you prefer to work with fractions, the divide fractions tool shows the reciprocal step, and the fraction to percent tool turns 1/11 into 9.09%.
The standard rate in different countries
The method is the same everywhere; what changes is the percentage and the name of the tax. In the United States there is no single rate: sales tax depends on where you shop and is usually added at the register, so the 8% above is only an example. Elsewhere, value-added tax (VAT) or goods and services tax (GST) is often already included in the shelf price. The rates below come from the official pages cited at the bottom, consulted on October 17, 2026. Each product can have a different, reduced or exempt rate.
| Country | Standard rate | Divide by | Price → base |
|---|---|---|---|
| United Kingdom (VAT) | 20% | 1.20 | £60.00 → £50.00 |
| Canada (federal GST) | 5% | 1.05 | $52.50 → $50.00 |
In Canada, some provinces add their own tax or use a combined rate, so check which rate applies to your purchase. If your country is not listed, find the rate on the page of its tax authority and use the same procedure.
Rounding to cents
When the division does not come out exact, keep the full result and round only at the end. With a 7% rate and a price of $100.00, the base is 100 ÷ 1.07 ≈ 93.46 and the tax is 100 × 7/107 ≈ 6.54. The two rounded figures add up to 100.00. If you rounded the base to 93 and calculated the tax as 100 − 93, you would get 7, which is 46 cents more than the correct value.
Use the ≈ sign for the rounded figure. The fraction to decimal page explains why 100/107 is not exactly 0.93.
When there is a discount before the tax
If the tag price came from a discount followed by tax, the factors multiply and are undone together. A 20% discount and 8% tax give a factor of 4/5 × 27/25 = 108/125. A final tag of $43.20 goes back to a base of 43.20 × 125/108 = $50. The order of the two factors does not change the product, but each percentage must be taken on its own amount. The successive discounts article develops that chaining, and margin vs. markup shows why the same percentage changes with the base you choose.
This procedure assumes a single percentage tax on the base. If the price includes fixed charges, several taxes or exemptions, split it into parts before dividing; each country’s rules decide which rate applies to each product.
Sources
- GOV.UK, VAT rates: the standard VAT rate is 20% (consulted October 17, 2026).
- Canada Revenue Agency, Which rate to charge and collect: an example with GST of 5% and a provincial tax added on top in Manitoba, and the note that other rates depend on the province or territory (consulted October 17, 2026).