$100.00
$20.00
16.67%
$100.00
$20.00
16.67%
When a price is advertised or quoted as tax-inclusive (also called gross price or VAT-inclusive), you need to extract the underlying tax-excluded (net) price for many business and accounting purposes. This calculator performs exactly that conversion.
Common scenarios where you need to convert from a tax-included to a tax-excluded price include: recording business expenses in accounting software where net and tax must be entered separately, comparing prices from suppliers who quote tax-inclusive vs. tax-exclusive amounts, verifying invoice correctness when both net and gross figures are shown, calculating the net revenue figure for financial reporting, and claiming input tax credits where the creditable amount is based on the net price.
This tool also shows the tax as a percentage of the total price — a useful figure that demonstrates why the tax component is always less than the nominal tax rate when expressed as a share of the gross price. For example, a 20% VAT rate means VAT is 16.67% of the total (tax-inclusive) price, not 20%.
Our Tax-Included to Tax-Excluded Calculator provides all three values instantly: net price, tax component, and effective tax percentage of the total.
Starting from the tax-inclusive price and tax rate $$r$$% (where $$r$$ is expressed as a number like 20 for 20%):
$$\text{Net Price} = \frac{\text{Tax-Inclusive Price}}{1 + \frac{r}{100}}$$
$$\text{Tax Component} = \text{Tax-Inclusive Price} - \text{Net Price}$$
$$\text{Tax as \% of Total} = \frac{\text{Tax Component}}{\text{Tax-Inclusive Price}} \times 100$$
The effective tax rate as a percentage of the gross price is always less than the nominal tax rate:
$$\text{Effective \%} = \frac{r}{100 + r} \times 100$$
For a 20% VAT rate: effective % = 20/120 = 16.67%. For a 10% GST: effective % = 10/110 = 9.09%.
This relationship is important for financial analysis. When you see that a $120 price includes $20 of 20% VAT, remember that the $20 represents 16.67% of the $120 total — the tax burden relative to the gross price is lower than the stated rate.
The Net Price is the pre-tax base price — this is what the seller receives as revenue (before remitting output tax). The Tax Component is the tax embedded in the advertised price, which flows to the government. The Tax as % of Total shows how much of every dollar you spend goes to tax — useful for understanding the true tax burden. If comparing tax-inclusive and tax-exclusive quotes, always convert to the same basis before comparing.
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A £600 VAT-inclusive price (20% VAT) yields a net price of £500 and VAT of £100. The tax is 16.67% of the £600 total.
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A $550 GST-inclusive amount in Australia contains $50 GST and $500 net. GST accounts for 9.09% of the total price.
The nominal rate (e.g., 20%) applies to the pre-tax base. When expressed as a fraction of the tax-inclusive total, it is always lower: for a rate r%, the fraction is r/(100+r). For 20%: 20/120 = 16.67%. This is mathematically consistent — the $20 tax on a $100 base is indeed 20% of $100 but only 16.67% of the $120 total.
Common scenarios: (1) entering expenses in accounting software that requires net amounts and tax separately, (2) claiming input tax credits where the recoverable amount is the net price, (3) verifying supplier invoices, (4) financial modeling where revenue and tax are tracked separately, (5) price comparison when one quote is tax-inclusive and another is tax-exclusive.
If you have both the net and gross price, you can calculate the rate: rate = (gross/net - 1) × 100. For example, net $100 and gross $120: rate = (120/100 - 1) × 100 = 20%. If you only have the gross price and need to determine the embedded tax, you must know the applicable rate from the invoice or tax authority.
This calculator assumes a single, uniform tax rate applies to the entire amount. For invoices with multiple line items at different rates, calculate each line separately and sum the results. Most accounting software handles mixed-rate invoices by splitting line items.
Yes — conceptually identical. Whether you call it reverse VAT, reverse GST, or tax-included to tax-excluded conversion, the math is the same: divide the gross amount by (1 + rate/100) to get the net amount. The terminology differs by country and context.
Yes. If you want your customers to pay exactly $X (tax-inclusive), this calculator tells you what net price to record on your books and what tax to remit. Conversely, if you need to know what to quote tax-inclusive to achieve a specific net revenue, use the forward VAT/GST calculator to add tax to your desired net price.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
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