Margin and Sales Tax Calculator

Created by Mateusz Mucha and Wei Bin Loo
Reviewed by Jack Bowater
Last updated: Jan 27, 2023

The margin and sales tax calculator combines these two issues for your ease - anyone selling anything will need to find the net and gross price based on their desired margin and the sales tax rate at some point. Feel free to calculate anything you like - you may be interested in how much you of your payment is going to the wholesaler (if you provide the gross margin and your price) or, if you're the wholesaler, what margins you're getting, given certain cost and your price. We also have a variant that calculates margin and VAT if you happen to live or work in a country where value added tax is in use.

What is sales tax?

Sales tax is a consumption tax paid when goods or services are sold. You pay it whenever you make a purchase. It is the responsibility of the retailer to collect sales tax and transfer it to the government.

How do I calculate sales tax?

To compute sales tax, follow these steps:

  1. Write down the net price of an item.
  2. Find out the sales tax rate you need to pay.
  3. Multiply the two numbers determined above.
  4. This is the sales tax! Add the sales tax to the net price to get the gross price.

FAQ

What is the net price for gross price $200 given 5% tax rate?

The net price is $190.48. To arrive at this result, recall the formula gross = net × (1 + tax rate), which we transform to net = gross / (1 + tax rate). Plugging in the numbers, we get net = 200 / (1 + 0.05) = 200 / 1.05 = 190.48.

What is the markup given a 20% margin?

The answer is 25%. This is because the formula that links markup and margin reads markup = margin / (1 - margin), so plugging in the numbers, we obtain markup = 0.2 / (1 - 0.2) = 0.2 / 0.8 = 1/4 = 0.25, so the margin is 25%, as we claimed.

Mateusz Mucha and Wei Bin Loo
Cost
$
Margin
%
Markup
%
My net price
$
Sales tax
%
My gross price
$
Profit
$
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