Tax, VAT and tips
Adding and removing tax, VAT-inclusive prices, tipping and splitting bills.
Tax, VAT and tipsHow to calculate sales tax on a purchase
Sales tax = price × rate ÷ 100, and the total is price × (1 + rate ÷ 100). Worked examples at 7.25% and 8.875%, rounding to the cent, and why your receipt can differ by a penny.
Tax, VAT and tipsHow to work out the price before sales tax from a total
To find the price before tax, divide the total by 1 + the tax rate. $53.50 at 7% tax is $50.00 before tax. Why subtracting 7% of the total gives the wrong answer, with worked examples.
Tax, VAT and tipsHow to calculate VAT on a net price
VAT = net price × VAT rate ÷ 100, and gross = net × (1 + rate ÷ 100). Worked invoice with a 20% standard-rate line and a 5% reduced-rate line, plus rounding and line-by-line rules.
Tax, VAT and tipsHow to remove VAT from a VAT-inclusive price
To get the net price from a VAT-inclusive price, divide by 1 + the VAT rate. At 20%, $96 gross is $80 net with $16 VAT. Why VAT is 1/6 of a gross price at 20%, not 20%, with worked examples.
Tax, VAT and tipsHow to calculate a tip: 15%, 18% and 20% in your head
Find 10% by moving the decimal point, then build 15%, 18% or 20% from it. Worked examples on a $64 bill, a one-step multiplier for the total, and how to round the tip.
Tax, VAT and tipsHow to split a bill with tax and tip
Split a restaurant bill evenly or by what each person ordered. Proportional split: multiply each person's items by (1 + tax rate + tip rate). Worked example for four people, plus rounding.
Tax, VAT and tipsShould you tip on the pre-tax or the after-tax amount?
Tipping on the pre-tax subtotal or the after-tax total? The difference is the tip rate times the tax: about $1.15 on an $80 bill at 8% tax and 18% tip. A table at several tax rates and how to decide.
Tax, VAT and tipsService charges vs tips: reading the percentages on your bill
A service charge is a fixed percentage added by the business; a tip is optional and set by you. How to read a bill with both, what the numbers mean, and how to work out an extra tip if you want to add one.
Tax, VAT and tipsCombined sales tax rates: state, county and city
When state, county and city sales taxes apply, add the rates to get the combined rate, then multiply once. 6% + 1.5% + 1% = 8.5%, so tax on $200 is $17. Why the rates add rather than compound.
Tax, VAT and tipsEffective tax rate vs marginal tax rate
Moving into a higher tax bracket only taxes the income above the threshold at the higher rate. How to calculate tax by bracket and the effective rate, with a worked example using simple hypothetical brackets.