# Incorrect Tax Calculation

I just started using Manager for my business but realised that the tax calculations by the application are wrong. i set a tax rate of 5% but it keeps calculating a sum less than that. For instance, an entry of 25,000 gives a tax calculation of 1,190.48 instead of 1,250 at 5%.

It looks like you have tax inclusive set on your invoice.

That was a bit confusing for me too, because there is no tax calculation in invoice editing and you will see you tax added only after saving invoice.

without tax set

after setting tax

when you set Tax Inclusive

After save you will see what have happened

With 20% tax
Amount wihtout tax = 25000 / 1.2 = 20833.33
20833.33 + 20% = 20833.33 * 1.5 = 25000
2% = 20833.33 * 0.20 = 4166.67

So if yiu want tax added on 25000 make sure “Amounts are tax inclusive” is not selected

I think it is a bit usability problem, because there is quite few user questions about the same on forum, but definitely NOT bug. If editing could present real time calculations it would be obvious what is going on, however after you know what you doing it is not an issue.

You can find more in this Guide: Choose between tax-exclusive and tax-inclusive prices | Manager.

Am I glad you guys already made this clear. For a while there I forgot my algebra. Much thanks.