How to Calculate the Net When Gross and Sales Tax Rate Are Known

by Matt McGew

In any transaction, the gross sales price includes the price charged by the merchant as well as the sales tax amount. The term “net sales price,” on the other hand, is the price before sales tax is applied. If you know the gross price and the sales tax rate, calculating the net is easy to do.

Step 1

Determine the gross sales amount. For example, assume the gross sales amount is $1,000.

Step 2

Determine the sales tax rate. As an example, assume the sales tax rate is 10 percent.

Step 3

Multiply the gross sales price by the sales tax rate as a decimal amount. Continuing the same example, $1,000 multiplied by .10 is $100. This figure represents the amount of sales tax paid on the gross sale price.

Step 4

Subtract the amount of sales tax paid from the gross sales price. In the foregoing example, $1,000 minus $100 is $900. This figure represents the net sales price.

References (1)

  • "Principles of Finance"; Scott Besley and Eugene Brigham; 2008