Calculate Sales Tax on an Order

Excel & Google Sheets

How it works

Multiplying the subtotal by the rate gives the tax itself: a $250 order at 8% owes $20. For the total in one step, multiply by one plus the rate — =B2*(1+0.08) gives $270, because 1 covers the original amount and 0.08 adds the tax on top. The reverse question comes up just as often: a card reader hands you a tax-included $270 and you need the pre-tax amount for your books. Divide by one plus the rate — =B2/(1+0.08) returns exactly $250. Subtracting 8% from the total does NOT work, because the 8% was charged on the smaller pre-tax amount, not on the total.

B2

The order subtotal, before tax.

0.08

The tax rate as a decimal — 8%. Better: put the rate in a cell and reference it as $E$1.

When to use it

Use it on invoice sheets, quote calculators, and daily sales logs — anywhere you charge tax on orders, or need to strip tax out of card-reader totals for bookkeeping.

Common mistakes

• ✕Backing tax out of a total by subtracting the rate.

  ✓=B2*(1-0.08) on a $270 total gives $248.40, not the true $250 — the tax was 8% of the pre-tax amount, not of the total. Divide instead: =B2/(1+0.08).

• ✕Typing the rate as 8 instead of 0.08.

  ✓=B2*8 charges 800% tax. Use the decimal (0.08) or the percent sign (8%) — both work.

• ✕Hardcoding the rate into fifty formulas.

  ✓When the rate changes you'll edit every cell. Put 8% in one cell and reference it: =B2*$E$1. One edit updates the whole sheet.