Calculating Sales Tax

Introduction

Welcome back to Shopping and Spending with Percentages! In the first lesson of this course, you learned how to calculate discounts and sale prices — percentages that reduce what you owe. Now, in this second lesson, we turn to a percentage that works in the opposite direction: one that increases your total at the register. Here we focus on calculating sales tax and total cost . Most purchases in the United States (and many other places) include a tax that is calculated as a percentage of the pretax price. By the end of this lesson, you will be able to find the tax owed on any purchase, even when the tax rate includes decimals like 6.5% or 8.25%, and determine the total amount you actually pay.

When you buy something at a store, the sticker price is usually not the final amount you pay. A sales tax is an additional charge — expressed as a percent of the purchase price — that goes to the local or state government. If the tax rate is 8%, that means for every $100 you spend, an extra $8 is collected as tax. One important detail is that sales tax is calculated on the pretax price (sometimes labeled "subtotal" on a receipt). The store adds up everything you are buying, applies the tax rate to that subtotal, and then tacks the result onto your bill. This two-part process — find the tax, then add it — is exactly what we will practice below.

\text{Tax} = \text{Pretax price} \times \text{Tax rate (as a decimal)}

\text{Total cost} = \text{Pretax price} + \text{Tax}

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