--- title: "How to Add or Remove Sales Tax From a Price | MCC Solutions" description: "The two formulas for adding sales tax to a price and backing it out of a total, with examples, rounding tips and what to record in your books." url: "https://mcc-solutionsnj.com/bookkeeping/guides/how-to-add-or-remove-sales-tax-from-a-price" --- Bookkeeping guide · Updated October 23, 2026 # How to Add or Remove Sales Tax From a Price Sometimes you know the price and need the total with tax. Other times you have a total from a receipt and need the price before tax. Both use the same rate in opposite directions. This guide shows the formulas, rounding and how to keep sales tax out of your income. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** To add sales tax, multiply the price by one plus the rate as a decimal. At 6.625%, a $100 item becomes $100 x 1.06625 = $106.63, so the tax is $6.63. To remove it from a total, divide by the same number. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Owner contribution or loan](/bookkeeping/guides/owner-equity-and-capital-contributions) · [Closing entries and retained earnings](/bookkeeping/guides/closing-entries-and-retained-earnings) · [Void vs delete a transaction](/bookkeeping/guides/voiding-vs-deleting-transactions) **Free tools:** [Price per unit calculator](/bookkeeping/price-per-unit-calculator) · [How many sales do I need to break even?](/bookkeeping/break-even-calculator) [Check your numbers in the sales tax calculator](/bookkeeping/sales-tax-calculator). [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## Adding tax to a price Multiply the price by one plus the rate written as a decimal. At a 6.625% rate, a $100 item becomes $100 times 1.06625, which is $106.625, rounded to $106.63. The tax is the difference, $6.63. Selling into a new state? [Sales tax permit registration](/bookkeeping/sales-tax-permit-registration). Always use the rate that applies where the sale is taxed. Rates can differ by place and by what is sold, so get the rate from your state or local tax agency instead of guessing. ## Taking tax out of a total Divide the total by one plus the rate. A receipt total of $106.63 at 6.625% gives $106.63 divided by 1.06625, or $100.00 before tax. The tax is the total minus that price. A common mistake is to multiply the total by the rate. That takes tax from an amount that already includes tax, and it comes out too high. For example, 6.625% of $106.63 is $7.06, not the real $6.63. ## Rounding Tax is usually rounded to the nearest cent. Some places round on each line and others on the whole invoice, which can create small differences of a cent or two. Use the method your point of sale system or your tax agency specifies, and use it consistently. If your records and your register disagree by pennies, check rounding before looking for a bigger problem. ## Keep it out of your income Sales tax you collect belongs to the state, not to you. Record it in a liability account instead of as revenue, and pay it on the schedule your tax agency sets. If it ends up in income, your profit looks higher than it is and your tax filings may not match. Reconcile the liability each period to the amounts on your returns. A small difference that repeats every month usually points to a rounding or setting problem. ## What is taxable Not everything is taxable. Some goods, services and customers are exempt, and rules vary by state. Keep exemption certificates for customers who claim an exemption. When you are unsure, ask your state tax agency or a tax preparer before you charge or skip tax. A free calculator handles the arithmetic, but it cannot tell you whether a sale is taxable. ## Common mistakes The most frequent errors are using the wrong rate, taxing items that are exempt, forgetting to tax shipping where it is taxable, and recording the tax as income. Another is using an old rate after it changes. Set up your point of sale or accounting software with the correct rates and review them at least once a year. If you sell in more than one place, check whether you need to register or collect elsewhere, and ask your tax agency or a preparer to confirm. ## Common questions **How do I find my sales tax rate?** Your state or local tax agency publishes the current rate for each location. **Is sales tax income to my business?** No. You collect it on behalf of the state. Record it as a liability and pay it on schedule. **Which way should I round?** Round to the nearest cent unless your tax agency or system says otherwise, and be consistent. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. 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Square & Stripe →](/bookkeeping/software/square-and-stripe) More guides - [Working Capital Explained: Formula, Example and Uses](/bookkeeping/guides/working-capital-explained) - [Current Ratio and Quick Ratio Explained With Examples](/bookkeeping/guides/current-ratio-and-quick-ratio-explained) - [Gross Profit vs Net Profit: What Each One Tells You](/bookkeeping/guides/gross-profit-vs-net-profit-explained) - [How to Set Prices for a Small Business: 3 Methods](/bookkeeping/guides/how-to-set-prices-for-a-small-business) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). Course: [Small Business Bookkeeping Basics](/courses/small-business-bookkeeping-basics) ($49) covers chart of accounts, reconciliations, the monthly close, payroll and 1099 basics for owners. It is training with a certificate of completion, not a credential. Tallyfinch ### Books you keep on your own computer Tallyfinch does invoices, bills, bank import, reconciliation and the main reports, in a file you own. $99 once, then $5 a month for updates; the app keeps working if you stop the plan. It does not do payroll or sales tax filing. The free download records up to 60 entries. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) [Download it free](/tools/pro/trial/mccBooks) [Compare the three apps](/software) ## Rather have us keep the books? Ask for a quote. [Get a Quote](/bookkeeping/#interest)[Call (908) 444-6373](tel:+19084446373)