Tax-exclusive price: Removing Included Tax from a Price
A tax-inclusive price contains both the underlying amount and tax on that amount. Dividing by one plus the rate recovers the pre-tax price.
Use the Tax-exclusive price Calculator to enter your own figures and compare the result with the worked example below.
Tax-exclusive price formula
Pre-tax price = Tax-inclusive price ÷ (1 + tax rate)
Worked example
| Item | Example value |
|---|---|
| Tax-inclusive price | 120 USD |
| Tax rate | 20 % |
| Tax-exclusive price | 100 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Subtracting the tax percentage directly from the inclusive total gives the wrong result. Use the applicable rate for the item and jurisdiction.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.