Sales Tax
General Explanation
You may have noticed that the price you pay for an item is not always the price that is marked on the item. Often, a tax is added to the purchase price.
Sales tax is an additional charge that is added to the purchase price of many items. State and local governments use these taxes to fund the services they provide. The tax rate is generally expressed as a percent. If the tax rate is 6%, this means that a tax of 6 cents will be charged on each dollar. Not all goods are taxed. In some states, certain items known as nontaxable items are not subject to sales tax. Those items that are subject to sales tax are known as taxable items. In order to calculate the sales tax for an item: ◼ Convert the tax rate from a percent to a decimal number ◼ Multiply this number by the price of the item Sample Problem
Monica purchased a bicycle for $175. The sales tax in the state where she lives is 7%. How much sales tax did she have to pay?
Solution
To find the sales tax, we will multiply the item's price by the sales tax rate. The sales tax rate is 7%. When written as a decimal number, the sales tax rate is .07.
Sales Tax = Item price x Sales tax rate Sales Tax = $175 x 0.07 = $12.25Monica paid sales tax of $12.25. |