How to Calculate Sales Tax

Calculating Total Cost

Multiply the cost of an item or service by the sales tax in order to find out the total cost. The equation looks like this: Item or service cost x sales tax (in decimal form) = total sales tax. Add the total sales tax to the Item or service cost to get your total cost. Calculating Sales TaxChange the sales tax into decimal form. For instance: 7.5% sales tax becomes .075 in decimal form3.4% sales tax becomes .034 in decimal form5% sales tax becomes .05 in decimal form Formula: Item or service cost x sales tax (in decimal form) = total sales tax.Sample calculation: $60 (item cost) x .075 (sales tax) = $4.50 total sales tax

Once you've calculated sales tax, make sure to add it to the original cost to get the total cost. If the total sales tax is $5 and your original item cost was $100, your total cost will be $105.

Examples

Try this example. You're buying a basketball in the state of Colorado, where sales tax is 2.9%. The basketball costs $25. How much is the total cost of the basketball, including sales tax?SolutionConvert the percentage sales tax into decimal form: 2.9% becomes .029.Multiply it out: $25 x .029 = $.73, or $25.73 total cost

Try another example. You're buying groceries in the state of Mississippi, where the sales tax is 7%. The grocery bill costs $300. How much is the total cost of the grocery bill, including sales tax?SolutionConvert the percentage sales tax into decimal form: 7% becomes .07.Multiply it out: $300 x .07 = $21, or $321 total cost

Try a third example. You're buying a car in the state of Massachusetts, where sales tax is 6.25%. The car costs $15,000. How much is the total cost of the car, including sales tax?SolutionConvert the percentage sales tax into decimal form: 6.25% becomes .0625.Multiply it out: $15,000 x .0625 = $937.5, or $15,937.5 total cost

Other Information

Know that some American states do not have sales tax. These states currently include: Delaware New Hampshire Montana Oregon Alaska

Know that states levy different taxes for different goods. A state or district, such as District of Columbia, may have a general sales tax of 6%, but set the tax rate on liquor and prepared food at 10%. New Hampshire, for example, has no general sales tax but still taxes restaurants, food services, hotels, room rentals, and motor vehicle rentals at 9%. Massachusetts, for example, only starts counting sales tax associated with clothing when the bill exceeds $175. So if you buy under $175 worth of clothing in Massachusetts, the state government won't tax it.

Be sure to check with your local state and city when calculating sales tax. We don't often talk of "city sales tax," but it's there. Most people, however, just lump it in with state sales tax. If you want to know exactly how much money you'll pay in taxes for a certain item, check your local state and city tax laws for more information Each city has its own tax, and it depends on where it's shipping to and where it's shipping from. Make real-world math click. "I've struggled with word problems and applying math concepts to real-life situations. After searching the web for help with sales tax homework, I found this guide. The step-by-step examples using actual tax rates showed me how to calculate total costs. Now, these practical math problems make sense!" - Ella K. Deliver your "aha" moment. "As a visual learner, I've never fully grasped how to figure sales tax. But the pictures demonstrating the equations in this article finally made it click! I followed along on my calculator, and the lightbulb went on. These effective visuals, paired with clear instructions, delivered my "aha" moment." - Christen J. Empower those intimidated by math. "Honestly, I've always found math intimidating and avoided finance concepts like sales tax. But this article explained everything in simple terms, even I could understand. After just 10 minutes of following the examples, I grasped sales tax for the first time ever. It's empowering to gain this real-world skill." - Stacy R. Clarify a confusing real-world skill. "I've been stuck not understanding sales tax for years, even though I use it practically every day. This guide clearly walked through the formulas and calculations in a way I could finally comprehend. Breaking down a confusing real-world skill through visuals and straightforward instruction was so helpful." - Saffron R. We want to hear from you! Advice from our readers makes our articles better. If you have a story you’d like to share, tell us here.