How to Calculate Sales Tax

It is important to know how much you have to spend before buying anything. It’s not as easy to see the price tags; To determine total cost, sales tax should be calculated. Sales tax rates are on the rise, which makes tax effect more important on a purchase. Use these tips to find out how to calculate sales tax on your retail purchase.

Calculating Total Cost

To calculate the total cost, multiply the cost of an item or service by sales tax. The equation looks like: commodity or service cost x sales tax (in decimal form) = total sales tax. To get your total cost, add total sales tax in item or service cost.

Calculation of sales tax

Change sales tax to decimal form for example:

7.5% sales tax in decimal form gets .075

3.4% sales tax gets .034 in decimal form

5% sales tax in decimal form gets .05

Formula: Cost of item or service x Sales tax (in decimal form) = Total sales tax.

Sample count: $ 60 (item cost) x075 (sales tax) = $ 4.50 total sales tax

After calculating the sales tax, be sure to add it to the original cost to get the total cost. If the total sales tax is $ 5 and the cost of your original item was $ 100, your total cost would be $ 105.

Examples

Try this example. You are buying a basketball in the state of Colorado, where sales tax is 2.9%. The cost of basketball is $ 25. How much is the total cost of basketball including sales tax?

Solution

Convert percent sales tax in decimal form: 2.9% .029.

Multiply it: $ 25 x .029 = $ .73, or $ 25.73 total cost

Try another example. You are buying groceries in the Mississippi state, where sales tax is 7%. The price of the grocery bill is $ 300. What is the total cost of grocery bill with sales tax?

Solution

Change percentage sales tax to decimal: 7% .07.

Multiply it: $ 300 x.07 = $ 21, or $ 321 total cost

Try a third example. You are buying a car in the state of Massachusetts where sales tax is 6.25%. The price of the car is $ 15,000. What is the total cost of a car, including sales tax?

Solution

Change percentage to decimal tax in decimal form: 6.25% .0625.

Multiply it: $ 15,000 x.0625 = $ 937.5, or $ 15,937.5 total cost

Calculating Sales Tax Rate

If you know the original cost of the item then do “de-calculation” by doing backward work. You can work backwards to find out the rate of sales tax as long as you know how much the cost was initially.

Examples

Suppose that you bought a computer, which is listed for $ 1,200, and the total bill was $ 1,266, which means that sales tax was $ 66. What is the rate of sales tax?

Take the tax rate and divide it by the original value: $ 66 200 $ 1,200 = .055

Moving the decimal point in two places to the right, change the decimal to a percentage: .055 gets 5.5%

Your original sales tax rate is 5.5%

Other Information

Know that there are no sales tax in some US states. These states currently include:

Delaware

new Hampshire

Montana

Oregon

Alaska

Know that there are different taxes for different commodities in the States. In a state or district, such as the District of Columbia, general sale can be 6%, but determine the tax rate on alcohol and prepare meals at 10%.

For example, there is no general sales tax in New Hampshire, but still it costs 9% in restaurants, food services, hotels, room rental and motor vehicle rentals.

For example, Massachusetts starts counting the sale tax associated with clothing only when the bill exceeds $ 175. So if you buy clothes worth $ 175 in Massachusetts, the state government will not tax it.
When calculating sales tax, be sure to check with your local state and city. We do not often talk about “city sales tax”, but it’s there. However, most people associate it with State Sales Tax. If you want to know how much money you will pay for a certain item, check your local state and city tax laws for more information.

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