Add sales tax to a price and see the total.
Total = subtotal × (1 + rate ÷ 100)
Subtotal = total ÷ (1 + rate ÷ 100)
The second formula is the one people get wrong. To strip 8% tax from a $108 total, divide by 1.08 to get $100. Subtracting 8% of $108 gives $99.36 — close, but wrong, and the error grows with the rate.
The United States uses sales tax, applied once at the final retail sale and — critically — usually excluded from the displayed price. The shelf says $10 and the register says $10.85.
Most of the rest of the world uses value added tax or goods and services tax, collected at every stage of production with businesses reclaiming what they paid on inputs. VAT is normally included in the displayed price, so the shelf price is what you pay.
This difference catches travellers in both directions. Visitors to the US are surprised at checkout; Americans abroad are surprised that the price on the label is final.
There is no national sales tax in the United States. Rates are set by states, and then counties, cities, and special districts frequently add their own on top. The combined rate can differ between neighbouring streets.
Five states levy no statewide sales tax at all — Alaska, Delaware, Montana, New Hampshire, and Oregon — though some Alaskan localities charge their own. Elsewhere, combined rates commonly land between 6 and 10 percent.
What is taxed also varies. Many states exempt unprepared groceries and prescription medicines, some exempt clothing below a threshold, and several run annual sales tax holidays for school supplies. Because rates and exemptions change, confirm the current rate for a specific address rather than relying on a remembered figure.