diff --git a/webview-ui/src/components/chat/TaskHeader.tsx b/webview-ui/src/components/chat/TaskHeader.tsx
index 8948302ce1..d5424b7422 100644
--- a/webview-ui/src/components/chat/TaskHeader.tsx
+++ b/webview-ui/src/components/chat/TaskHeader.tsx
@@ -282,9 +282,13 @@ const TaskHeader = ({
 								sideOffset={8}>
 								<span className="flex items-center gap-1.5">
 									{(() => {
-										const percentage = Math.round(
-											(((contextTokens || 0) + reservedForOutput) / contextWindow) * 100,
-										)
+										// Calculate percentage of available input space used
+										// Available input space = context window - reserved for output
+										const availableInputSpace = contextWindow - reservedForOutput
+										const percentage =
+											availableInputSpace > 0
+												? Math.round(((contextTokens || 0) / availableInputSpace) * 100)
+												: 0
 										return (
 											<>
 												<CircularProgress percentage={percentage} />
diff --git a/webview-ui/src/components/chat/__tests__/TaskHeader.spec.tsx b/webview-ui/src/components/chat/__tests__/TaskHeader.spec.tsx
index 07aa5480af..c4ebe06973 100644
--- a/webview-ui/src/components/chat/__tests__/TaskHeader.spec.tsx
+++ b/webview-ui/src/components/chat/__tests__/TaskHeader.spec.tsx
@@ -91,6 +91,26 @@ vi.mock("@roo/array", () => ({
 	},
 }))
 
+// Create a variable to hold the mock model info for useSelectedModel
+let mockModelInfo: { contextWindow: number; maxTokens: number } | undefined = undefined
+
+// Mock useSelectedModel hook
+vi.mock("@/components/ui/hooks/useSelectedModel", () => ({
+	useSelectedModel: () => ({
+		provider: "anthropic",
+		id: "test-model",
+		info: mockModelInfo,
+		isLoading: false,
+		isError: false,
+	}),
+}))
+
+// Mock getModelMaxOutputTokens from @roo/api
+let mockMaxOutputTokens = 0
+vi.mock("@roo/api", () => ({
+	getModelMaxOutputTokens: () => mockMaxOutputTokens,
+}))
+
 describe("TaskHeader", () => {
 	const defaultProps: TaskHeaderProps = {
 		task: { type: "say", ts: Date.now(), text: "Test task", images: [] },
@@ -402,4 +422,52 @@ describe("TaskHeader", () => {
 			expect(backButton?.querySelector("svg.lucide-arrow-left")).toBeInTheDocument()
 		})
 	})
+
+	describe("Context window percentage calculation", () => {
+		// The percentage should be calculated as:
+		// contextTokens / (contextWindow - reservedForOutput) * 100
+		// This represents the percentage of AVAILABLE input space used,
+		// not the percentage of the total context window.
+
+		beforeEach(() => {
+			// Set up mock model with known contextWindow
+			mockModelInfo = { contextWindow: 1000, maxTokens: 200 }
+			// Set up mock for getModelMaxOutputTokens to return reservedForOutput
+			mockMaxOutputTokens = 200
+		})
+
+		afterEach(() => {
+			// Reset mocks
+			mockModelInfo = undefined
+			mockMaxOutputTokens = 0
+		})
+
+		it("should calculate percentage based on available input space, not total context window", () => {
+			// With the formula: contextTokens / (contextWindow - reservedForOutput) * 100
+			// If contextTokens = 200, contextWindow = 1000, reservedForOutput = 200
+			// Then available input space = 1000 - 200 = 800
+			// Percentage = 200 / 800 * 100 = 25%
+			//
+			// Old (incorrect) formula would have been: (200 + 200) / 1000 * 100 = 40%
+
+			renderTaskHeader({ contextTokens: 200 })
+
+			// The percentage should be rendered in the collapsed header state
+			// Verify that 25% is displayed (correct formula) and NOT 40% (old incorrect formula)
+			expect(screen.getByText("25%")).toBeInTheDocument()
+			expect(screen.queryByText("40%")).not.toBeInTheDocument()
+		})
+
+		it("should handle edge case when available input space is zero", () => {
+			// When contextWindow equals reservedForOutput, available space is 0
+			// The percentage should be 0 to avoid division by zero
+			mockModelInfo = { contextWindow: 200, maxTokens: 200 }
+			mockMaxOutputTokens = 200
+
+			renderTaskHeader({ contextTokens: 100 })
+
+			// Should show 0% when available input space is 0
+			expect(screen.getByText("0%")).toBeInTheDocument()
+		})
+	})
 })