hole size = what you want before tapping
basic major diameter = nominal size of bolt you are going to tap hole for (ie 8mm)
pitch = threads per mm ( 1.25)
percent full thread = 75% will be expressed as .75
OK here goes:
hole size = basic major diameter - (1.08253 x pitch x percent full thread)
That's it.
Now realize that normal thread engagement is 75% but in most materials that is overkill (its still the manufacturing standard). When you are tapping a hard or tough material you can go to a lesser thread engagement without affecting the strengh of the joint....so use a drill sized to give you 55-60% engagement and you will not break as many taps. Also you won't be fighting the tap as much at 60%.
P.S. use a good tapping fluid....it will really help
HTH,
Scott